This item is skinned from high level creatures, most often beasts, in Outland, and beasts in The Black Morass. Leatherworkers with a skill level of 300 can also combine five to make one Knothide Leather.
There are two primary areas in which to farm this type of leather. The first is in Nagrand; there are plenty of beasts from the Nesingwary quests that other players kill but do not skin. The second is in The Black Morass instance in the Caverns of Time.
As an ingredient
As a quest objective