A wavefolder reflects a wave back on itself past a threshold, creating high harmonics instead of clipping
A wavefolder is a specific kind of waveshaper: it uses a comparator to detect when the wave goes above (or below) a threshold, and instead of clipping off the peak it creates a mirror image and reflects that portion back on itself, adding new high harmonics and interesting spectra. This is the opposite of a filter (which removes harmonics) and distinct from clipping distortion (which flattens peaks): folding creates extra zero-crossings and reversals. Driving the input harder produces more folds and richer spectra, which is why the wavefolder is a principal West Coast tool for enriching simple waveforms.
Examples
A sine at low drive through a Serge/Buchla-style wavefolder stays nearly pure; raising the input gain adds successive folds and a brighter, often glassy or metallic spectrum. Mutable Instruments Warps in wavefold mode demonstrates this in VCV Rack.
Assessment
Contrast wavefolding with hard clipping as ways to add harmonics to a sine wave: which flattens peaks and which reflects them, and what does each do to the spectrum as gain increases?