Ever so long ago when I was a new bride, I carefully opened a package of sheets to see how they managed to all of that fabric into such a small package. That is how I learned to fold the fitted bottom sheets. In general just tuck all of the corners into each other, square it up by folding in the "drop" and fold in again and again until it is the size you want it to be for stacking in your cupboard.
Bottom line, I always fold linens. Sometimes I have changed the final size of the sheets or towels to accommodate the size of the shelf or cupboard.