AIt is fondant with texture added with a modeling tool. Similar to the way you would add indentations for pages on a book cake. Make sense?
If I were doing it, I'd cover the top of the cake with a smooth circle of fondant about 2" larger than the diameter and apply it. I'd then roll out a long rectangle of fondant about 2X the height of the tier and a bit shorter than the circumference. I'd gently pleat the piece evenly so that it was as wide as the height of the tier and let it sit for a few minutes. I'd then apply it around the cake tier, turning under the ends a bit. I'd add a decorative piece down the middle.
Jmlpitbull, yes that makes sense. BluesCakes, I understand what you are talking about also, just don't know if I'm up to the challenge.
I'd say that's definitely done using a liner tool and it's not nearly as hard as you think!
I can see doing it with a tool, but.......in order to get nice definition of the pleats, you'd need a decently thick layer of soft BC under a thick-ish layer of fondant and you'd have to be very quick so as not to tear the fondant or get elephant skin.
I think that doing it as a pleated panel allows for less BC and a thinner piece of fondant, as well as more working time. Also, working on a firmer surface allows for crisper pleats.
But in the long run, whatever way that works for YOU is the best way.