How do I cover my cake with fondant and keep from having bunched up areas?

You smooth the fondant as you go. This is the sort of thing best demo'd in a video. Try looking on you tube.

These might help:

I sort of think of it like coaxing the fondant to absorb the wrinkles back into itself. It's kinda weird because fabric or clay won't do something like that. Most instructions say something along the lines of "keep working with it and it will eventually behave". As a beginner, I found that you need some patience and determination; don't give up! Keep lifting it away and help it re-shape itself to how you want it.

I also have tutorials on my signature. Check how to cover a cake in fondant. Sugarandslice probably covered them all.

i sit my cake on the large crisco can, let it hang smooth, smooth the top and sides and cut around the bottom...it helps with the wrinkles around the bottom.