A "mod folder" is the term used to describe placing all the revised files for a mod into a separate folder so that they do not overwrite any of the existing game files. If a mod is fully "mod foldered" then it and the original game can be played on the same game installation just by using a different short-cut to each. Other similar "mod folder" mods can also use the same installation saving the player a lot of hard-disc space and reducing the need to uninstall and reinstall the game.
For the games built on the Warscape engine (Empire: Total War onwards) a pack system is used and the mod-folder term is not relevant.
Mod foldered mods are possible for: