The first example of such a use case was shared on the Whole Mars Catalog channel, in a short video when the car found itself between a barrier and a truck. It was enough to trigger folding.
"Something strange and unexpected happened while using FSD today... while the car was between a wall and a big truck it decided to fold its mirrors for a second. Had no idea it had the ability to automatically fold its mirrors in tight spaces."
Once the surroundings happened to be less tight, the mirrors quickly unfold. It took just a few seconds in total.
It's a really cool feature. It's automatic and improves safety. We guess that once the cars are truly full-self driving (not beta), mirrors will be folded all the time to lower the drag and improve efficiency. Currently they can't, because it's beta and the driver need to use mirrors to take full responsibility for the driving.
Now, we wonder what else might happen when the computer is in control of the car?