Speak like a pro:
Felting is the making of a non-woven fabric.
Fulling is the shrinking and strengthening of any wool fabric (knit, crochet, woven, or felt).
So, if you knit or crochet something, and then you wet it to shrink it, you are FULLING the fabric. You are not felting it.
If you are taking loose fibers and needling or manipulating them into a fabric, you are FELTING. If you then take that felt and wet it to shrink it, you are FULLING the felt.
Clear as mud? :)