After a minchah (meal offering) is fried or baked, the Torah tells us that it is broken up into pieces. Here we'll talk about how the menachot are broken up and which menachot are actually broken up. The Mishnah says that all menachot that are fully prepared in a kli sharet (service vessel) are broken into pieces, even though there are some other menachot that are also broken into pieces. What we're talking about here is if it is put together in a kli sharet: if it is completely prepared in a kli sharet, from start to finish, it has to be broken up. Other menachot are also broken up; some oven-baked ones are broken up, and others are not broken up at all. What we're saying here is that if it is prepared in a kli sharet, it is fully broken up.
With Minchat Yisrael, if we're talking about a minchah donated by Yisrael as opposed to a Kohen (priest), what he does is take each loaf and fold it into two, and then fold those two pieces into four. So he creates indentations in the loaf where we now see distinct sections of the minchah, and afterwards he has to break it up. It's not broken up yet. Then he separates the loaf along those folds, breaking it up into four pieces, so now kemitzah can be done. Unless the pieces are small enough for the Kohen's hand, kemitzah wouldn't work. Therefore, it has to be fully separated.
For Minchat Kohanim, we're talking about the minchah that was donated by the Kohanim. What he does is fold each loaf into two, then fold the two pieces into four. That's the requirement of the Torah, breaking up the minchah. He doesn't separate these loaves into different pieces, because there's no kemitzah when it comes to the loaves of the Kohanim. In the case of the Kohen Gadol's (High Priest's) minchah, it was not folded into four pieces, but was only folded into two. There's no kemitzah on this minchah; therefore, there was no separation. We're talking about a voluntary minchah donated by a Kohen; there's only one fold.
R. Shimon says the minchah of Kohanim and the minchah of the Kohen Gadol have no breaking up whatsoever, and therefore there's no folding with them. Because there's no minchah—because these menachot don't require kemitzah—we're not going to break them up at all. Because there's no kemitzah, a minchah that does not have a requirement of kemitzah is not broken up at all. According to R. Shimon, when the Torah obligates breaking up a minchah, it is so that kemitzah could be done, so that each piece could fit into the hand of the Kohen. Therefore, in a minchah that has no concept of kemitzah, there would be no idea of breaking it up.
We learned earlier that the minchah of Yisrael is folded and broken into four pieces. R. Shimon disagrees with that as well. He says that all of them—all of the menachot that require breaking up—are broken up into pieces that are the size of a kezayit. A person has to not just stop at four, but continue to break it up so that they're all no larger than the size of an olive.