The Linen closet truly is not a catch all. It is super handy for that, but it really is wonderful when it is organized.
Sheets, towels, blankets and pillows are generally in a linen closet. Figure you need two sets of sheets per bed, and stop keeping the odd balls. You do not need to keep the extra top sheet that matches nothing unless of course you have kids and are still building forts. If you are still in the building fort stage I would keep everything that is helpful for that.
Otherwise just keep what is not beady and threadbare. You do not need to keep all of the old towels for the dog’s bath. 3 are great. If you buy better quality sheets they will last a lot longer too. They cost more more but they last until the elastic wears out. Sheets should be easy to reach, but towels need to be the easiest and at eye level.
Yes people sleep over. Yes you need a couple extra blankets, but stop yourself there. You do not need to keep every tired quilt you have every owned. Keep 2.
Fold things so they take up as little space as possible and so that they look nice. A basket of washcloths is lovely. Towels folded length-wise in thirds and folded over twice look very neat and tidy. The smooth folded part faces out towards you.
If space is really tight, rolling towels looks great too.
Storing pillows in a large basket at the bottom of the closet is a great way to fit the 4 you need to save for guests. Don’t go nuts. 4 is plenty. Do not save every old pillow. Pillows can become very dirty with sweat and use over time. I generally keep 4 nice pillows for guests and eventually when I throw out the old pillows on my beds, they replace them and I buy new.
When my linen closet is organized for some reason I FEEL organized.