Fan-out occurs when a transaction depends on several transactions, and those
transactions depend on many more. It is not a problem in the bitcoin network, since there is never the need to extract a complete standalone copy of a transaction's history.

University of Minnesota - Twin Cities

To allow value to be split and combined, transactions on the bitcoin network contain multiple inputs and outputs. There will usually be a single input from a larger previous transaction or multiple inputs combining smaller amounts, and at most two outputs: one for the payment, and one returning the change to the sender.

Combining and Splitting Value

Nakamoto, Satoshi. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. https://bitcoin.org/bitcoin.pdf

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