Foundations is a button on the Menu from which you can build and demolish Buildings. A building requires an entrance which can either be a door or a demolished wall. Placing foundations on top of an existing one will cause them to merge and demolish the wall(s) between them which is useful for expansion. Placing foundations one square next to an existing one, will keep the wall(s) intact.
Buildings cannot be created by simply placing walls and any type of flooring. Building a foundation is required in order for it to be classified as "Indoors."
If you cancel a foundation and build it again (on top of the old one) you will be charged the same price again.
As of Alpha 13, the Foundation tool does not display the complete price of a building.
For example, a 5x5 room displays a cost of $250, which is $10 per square. However, the true price of the complete room is the Foundation cost as well as the Steel and the Concrete that will be used. These both cost $10 per square.
If your Storage room lacks suffient stockpiles of steel and concrete, they will be automatically purchased, effectively doubling the price of the room.