Basically the second fold has to be perfectly parallel to the first fold, and a black line on the Shape Cut has to line up perfectly with one of the folds. This ensures that the cuts will remain exactly 90 degrees from each fold.
To test the necessity for cuts to be exactly 90 degrees from the fold, take a piece of paper and fold it. Line up the fold with a line on the Shape Cut, cut a strip, and unfold to see how straight it is. Do the same thing again, except this time make sure that the line is a little "off" from being lined up with the fold. Cut, unfold the strip, and you will see the wonkiness near the fold.