my travel companion noticed a flat spot with canvas showing on a main gear wheel
There are two sides to this.
1. The canvas you can see is not the canvas under the tread. When an airliner tyre is worn to a slick there is still 4-5cm of rubber remaining. Nowadays there are two types of tyres, crossplies and radials. Crossplies are still the norm on older B737, B757 B767 etc. Radials are norm on all Airbus from A320 on and B777. In a radial tyre there are reinforcing cords in the tread that become exposed when the tyre is nearly worn.
2. Nearly all tyres are retreaded. Most airlines set standards so that the tyre is removed in a condition so that it is fit to retread. If it is let to wear too far then it will not be possible to retread.
Some tyres cannot be retreaded. So it is in the airlines interest to allow the tyres to wear further.
A bald tyre is no problem on a dry runway (Formula 1 are reintroducing slicks next season), but can cause problems in the wet.