Folding difference with foo *** 1 and foo **** 1

foo **\* 1 => n
foo ***\* 1 => noo1
foo ****\* 1 => n
foo *****\* 1 => noo1
( continue... )

I have two questions about this folding.
1. Is that a intended behavior?
2. Where on the code can I find this folding process?

Thanks!