The one cut is to remove the perimeter of the square that lies outside the heptagon. Without the cut, you could make a crease, and fold the excess behind the heptagon.
But remember one is dealing with idealized / axiomatized folding. The situation is similar with compass and straight edge geometry -- those physical lines and circles marked on paper are approximate but mathematically, in the world of axioms we assume the tools are capable of perfect constructions.
Does that mean folding allows you to construct (without trial-and-error) an accurate heptagon, even though you can't with a straight-edge and compass?
Intuitively, that seems wrong, I would expect many of the same limitations to apply.