The custom of tying rags onto trees by ancient wells is very much alive, as evidenced by these at Cerne in February 2003. The custom, though, is ancient. Here's Robert Plot describing "Wilweorthunga" in his 1677 "Natural History of Oxford-shire, being an essay towards the Natural History of England".
This is Chapter 2 (on Water), paragraph 70
"But of much greater fame was the Well of St Edmund, without St Clements in Oxford, now quite stopt up; but as 'tis remembered by some of the ancientest in the parish, was in the field about a furlong SSW of the church; this at least was believed to be so effectual in curing divers distempers, and thereupon held to be of so great sanctity, that here they made vows, and brought their alms and offerings; a custom, though common enough in those days, yet always forbidden by our Anglican Councils, under the name of [Wilweorthunga] more rightly translated as well-worship than will-worship, as is plainly made appear by the Reverend and Learned Doctor Hammond, out of an old Saxon penitential, in a Saxon homily of Bishop Lupus; where the word is rather shewed to signify fontem, than voluntatem, against these superstitions so ordinary in those days, there are several prohibitions in the fore-cited penitential and homily, and of which kind are also diverse injunctions to be seen on the Office of Lincoln, of Oliver Sutton; and amongst them, one particularly against the worship of this well of St Edward, within St Clements in Oxford, and St Lawrence's well at Peterborough &c"
Bishop Lupus of Troyes (d about 478) was actually an Athanasian mystic monk of Lérins, the centre from which Gaul was redirected to the Roman system. He accompanied Bishop Germanus of Auxerre from Gaul to Britain in 429, at the behest of the Council of Arles, to rid the land of the Pelagian heresy. Pelagians denied the corruption of the nature of man by original sin, and preached at crossroads, which were seen by the Romans as being centres of the goddess Hecate. The two accepted their commission with evident relish, eventually ended the heresy "through their prayers, preaching, and miracles".
It's fairly obvious why Lupus should be set against the custom and indeed the council of Arles itself decreed in 452 that "if in the territory of a bishop infidels light torches or venerate trees, fountains or stones and he neglects to abolish this usage, he must know that he is guilty of sacrilege". The practice must have remained well entrenched if Lupus felt it necessary to make "several prohibitions" in his homily – and the prohibitions must have been widely ignored, since King Edgar (in 959) and later King Canute (around 1020) found it necessary to ban well worship by statute "We teach that every priest shall extinguish heathendom, and forbid wilweorthunga…"; "it is heathen practice if one worships idols, namely if one worships the heathen gods and the sun or the moon, fire or flood, wells or stones, or any kind of forest trees".
But Plot isn't strictly correct that the cult of wells in general was "always forbidden". Eventually the church gave up the unequal struggle and by the early 1100s, following the Council of Westminster, new local well cults were simply subject to the authority of the local bishop. In 1677, Plot found remnants of the customs, which survive today, both in ad hoc offerings at wells and in the organised community events of well-dressings - often under the ægis of the modern church.