Communism doesn't entail owning nothing or being able to produce nothing. It often even has a concept of money to trade for goods and services.

So you could take your earnings, buy some yarn, knit your friend a scarf, and there's no real change in societies.

The difference is that you'd get your money from a state run industry. Your home would be guaranteed. And where you ultimately end up working would be based on your capabilities.

You are free to knit or whittle gifts for friends. What you wouldn't be free to do is setup "mopsi's scarf business" without working through the state. You wouldn't be allowed to take the earning from "mopsi's scarf business" and use them to become a landlord. You could gain social status and benefits by running the scarf business, but those would be limited (barring corruption).

When I say "a communist society collectively owns everything" I'm talking mainly businesses, land, housing.

A mistake that people often make about communism is thinking it means "Everything is free" or "nobody owns anything". That's more of a collectivist approach. Communism is mostly centered around providing minimum guarantees through public ownership.