What does it mean to "fold in" an ingredient into a mix?
"Folding" is a more gentle mixing technique than "stirring" and "mixing". Stirring and mixing both denote a more vigorous action.
Folding is usually used for items where something has previously been whipped (such as egg whites or cream) or where tenderness is desired and thus less mixing is advisable (muffins & biscuits).
Folding is usually done with a rubber spatula (for liquid & dry ingredients) or with a wire whisk (often beneficial for whipped cream and egg whites so that the mixture gently incorporates as it falls through the wires).
To "fold" ingredients together: Hold the spatula or whisk in your dominant hand and grasp the far edge of the bowl (side that is away from you) with your non-dominant hand. Turn the bowl towards you with your non-dominant hand while simultaneously scraping around the edge (also toward you) and finish by folding the mixture over on top of itself. Return both hands to the far side of the bowl and follow-up by cutting through the center of the mixture with your utensil and once again folding the mix over on top of itself (again, turning the bowl simultaneously). Alternate scraping around the side and through the middle of the bowl until the mixture is just combined together.
Note that if an airy mixture such as egg whites or whipped cream start to go from soft and billowy to more liquid-like, you are overworking it and need to stop to maintain volume.
In the case of whipped cream and egg whites you typically add a small portion to the heavier mixture and actually DO stir this in. While yes you're losing some of the volume of that portion, it serves to help lighten the heavier batter/mixture. The rest of the whites/cream are then folded in to the mix in several additions.
Sometimes dry ingredients may be sift on top of whipped eggwhites before being folded.
The larger the spatula or whisk, the fewer strokes that will need to be made and the better the results will be.
Good explanation of WHY to fold. But it's easier to show HOW to fold than describe it. http://www.youtube.com/watch?v=-rLQFfolobY