what folder do I install wordpress into

It really depends on your situation. If you have an existing website that you want to “add” a wordpress blog to, then you can create a subdirectory to place it in…. such as domain.com/blog in your example.

If you are creating a brand new site, I would install it in the root. You can always set up a different home page and move the blog posts using the Settings >> Reading in your dashboard. Useful if you want a splashpage about you/your company to welcome readers and your blog posts on a subpage (which would still be accessed as domain.com/blog).