"Folding" is applicable mostly to outlines, and it's where there are elements,
say, I, II, and III. Each one has lots of sub-elements, i, ii, etc... However,
Upon opening this outline, I don't need to see all the sub-elements, and in
cases where it's a rather huge-ish outline, it just wouldn't be smart to be
forced to see it all at once. Rather, only seeing the I, II, and III elements
would be best, having an + and - symbol next to it or something, that displays
whether there are sub-elements under it or not. Clicking it would turn a + into
a -, or visa versa. If it's "-", it means clicking on it will display less. If
you press a "+" it will display more. 
I'm finding it rather difficult to explain, so checking out the FreeMind project
would most likely offer a peek on what I'm talking about. More specifically,
check out http://freemind.sourceforge.net/PublicMaps-exported.html, and you'll
see what "folding" is. 

I feel this is a particularly important feature to serious note-takers in
college classes. Surely there are even more uses.