Well, mostly when they come out of the drier they get hung up immediately in a bathroom or kitchen. But the few extras that I have get folded in #1 style.
2. Same way my mom and grandma taught me. They stay stacked nicely that way.
1 wouldn’t fit in our little linen closet. I do 3 for Mooch’s blankets and beach towels that get stored in a rope basket in the living room. Thats nicer for display.
#1 for small (hand, face cloths), #2 for large, however, when put away in the closet, the folded ends face out, not the edges. It just looks cleaner that way.