Molly's mistake is that she actually wrapped 4 whole sandwiches, not 16.
Since she cuts each sandwich into fourths, each whole sandwich produces four fourths. Therefore, if she wrapped 16 fourths, she must have cut up and wrapped 16/4 = 4 whole sandwiches.
It seems like Molly made the mistake of assuming that the number of fourths wrapped was equivalent to the number of whole sandwiches wrapped. However, this is only true if she were wrapping the entire sandwich and not just the fourths.