The flag folding ceremony is a symbolic passing of the 13 truths, one for each fold of the flag. These truths represent the same religious principles upon which our country was originally founded. (Flag "pops" to flat horizontal position.)
The canton of blue is the portion of the flag denoting honor. It contains the stars representing each state of our Veterans who have served in uniform. The canton field of blue dresses from left to right, and is only inverted in time of distress. It is also draped as a country mourns those in uniform who have fallen in honorable service.
Every evening at the ceremony of retreat, the armed forces of the United States lowers and folds the flag in a triangular fold. It is then kept under watch throughout the night as a tribute to our nation's honored dead. The next morning, it is brought out at the ceremony of reveille and run aloft as a symbol of our belief in the resurrection of the body.

The first fold of the flag is the symbol of life.
The second fold is a symbol of belief in eternal life.
The third fold is made in honor and remembrance of the veterans departing our ranks. We pay tribute to veterans who gave a portion of their life for the defense of their country, in the hopes of attaining peace throughout the world. A fold symbolizing their sacrifice has not been in vain, and shall never be forgotten.
The fourth fold represents our true faith; for as American citizens trusting in God, it is to Him we turn for His divine guidance in times of peace, as well as in times of war.
The fifth fold is a tribute to our country; for in the words of the immortal Steven Decatur, "Our Country, in dealing with other countries, may she always be right, but right or wrong she is still our country."
The sixth fold is where our hearts lie, because it is with our hearts that we pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all.
The seventh fold is to our armed forces; for through these same armed forces we protect our country and our flag against all enemies, foreign or domestic.
The eighth fold is a tribute to those who have entered into the valley of the shadow of death, that they may see the light of day.
The ninth fold is a tribute to womanhood; for through their faith, love, loyalty and devotion, characters of the men and women that have made this country great have been molded. This fold is made in honor of our mothers, for whom the flag flies on Mother's Day.
The tenth fold is a tribute to the fathers, for they too have given sons and daughters in the defense of our country, ever since the first struggle for independence.
The eleventh fold, in the eyes of a Hebrew citizen, represents the lower portion of the seal of David and King Solomon, and glorifies in their eyes the God of Abraham, the God of Isaac, and the God of Jacob.
The twelfth fold, in the eyes of a Christian citizen, represents an emblem of eternity, and glorifies in their eyes God the Father, God the Son, and God the Holy Ghost.
The thirteenth fold symbolizes the original colonies. We fold from the stripes toward the stars; for the stripes represent the thirteen original colonies that founded our republic, they are now embodied in the fifty sovereign states represented by the stars.

When folded, the stars are uppermost, which reminds us of our national motto, "In God We Trust".
After the flag is completely folded and tucked in, it takes on the appearance of a three-cornered hat, ever reminding us of the soldiers who served under General George Washington and the sailors who served under Captain John Paul Jones.
They who have followed their comrades and shipmates in the armed forces of the United States have preserved for us the rights, privileges, and freedoms which we still enjoy today. May God continue to bless the United States of America!

This information comes from the United States Flag Code.