I'll say 'fold diagonally' if I mean it; otherwise 'fold in half' means orthogonally. Since cloth napkins are usually square, or close to it, we won't have to discuss folding 'the long way' or 'the short way' or 'the hamburger way'.
If I were writing a book, I'd go into depth on the different types of material (cotton is better than a cotton/polyester blend), how much starch to use (just enough, but not more), and how the napkins should be ironed and stored to avoid unsightly wrinkles and creases. Since you'll mostly practice this in a restaurant where you don't control any of that anyway, I won't. I will note that the fanciest restaurants always seem to have the worst napkins for folding, and the restaurants that are just one step away from having a paper napkin dispenser on the table tend to use napkins that accept folds very well.
If you're from over the pond and giggle helplessly every time I say 'napkin', you may search/replace 'napkin' with 'serviette'.