When the shell performs parameter expansion, command substitution, variable or arithmetic expansion, it scans for word boundaries in the result. If any word boundary is found, then the result is split into multiple words at that position. The word boundary is defined by a shell variable IFS (Internal Field Separator). The default value for IFS are space, tab and newline, i.e. word splitting will occur on these three white space characters if not prevented explicitly.

set -x
var='I am
a
multiline string'
fun() {
    echo "-$1-"
    echo "*$2*"
    echo ".$3."
}
fun $var

In the above example this is how the fun function is being executed:

fun I am a multiline string

$var is split into 5 args, only I, am and a will be printed.

To be more clear, let's create a script named showarg:

#!/usr/bin/env bash
printf "%d args:" $#
printf " <%s>" "$@"
echo

Now let's see the differences:

$ var="This is an example"
$ showarg $var
4 args: <This> <is> <an> <example>

$var is split into 4 args. IFS is white space characters and thus word splitting occurred in spaces

$ var="This/is/an/example"
$ showarg $var
1 args: <This/is/an/example>

In above word splitting didn't occur because the IFS characters weren't found.

Now let's set IFS=/

$ IFS=/
$ var="This/is/an/example"
$ showarg $var
4 args: <This> <is> <an> <example>

The $var is splitting into 4 arguments not a single argument.

See what, when and why if you don't know about the affiliation of IFS to word splitting

let's set the IFS to space character only:

set -x
var='I am
a
multiline string'
IFS=' '
fun() {
    echo "-$1-"
    echo "*$2*"
    echo ".$3."
}
fun $var

This time word splitting will only work on spaces. The fun function will be executed like this:

fun I 'am
a
multiline' string

$var is split into 3 args. I, am\na\nmultiline and string will be printed

Let's set the IFS to newline only:

IFS=$'\n'
...

Now the fun will be executed like:

fun 'I am' a 'multiline string'

$var is split into 3 args. I am, a, multiline string will be printed

Let's see what happens if we set IFS to nullstring:

IFS=
...

This time the fun will be executed like this:

fun 'I am
a
multiline string'

$var is not split i.e it remained a single arg.

You can prevent word splitting by setting the IFS to nullstring

A general way of preventing word splitting is to use double quote:

fun "$var"

will prevent word splitting in all the cases discussed above i.e the fun function will be executed with only one argument.

$ a='I am a string with spaces'
$ [ $a = $a ] || echo "didn't match"
bash: [: too many arguments
didn't match

[ $a = $a ] was interpreted as [ I am a string with spaces = I am a string with spaces ]. [ is the test command for which I am a string with spaces is not a single argument, rather it's 6 arguments!!

$ [ $a = something ] || echo "didn't match"
bash: [: too many arguments
didn't match

[ $a = something ] was interpreted as [ I am a string with spaces = something ]

$ [ $(grep . file) = 'something' ]
bash: [: too many arguments

The grep command returns a multiline string with spaces, so you can just imagine how many arguments are there...:D

See what, when and why for the basics.

There are some cases where word splitting can be useful:

Filling up array:

arr=($(grep -o '[0-9]\+' file))

This will fill up arr with all numeric values found in file

Looping through space separated words:

words='foo bar baz'
for w in $words;do
    echo "W: $w"
done

Output:

W: foo
W: bar
W: baz

Passing space separated parameters which don't contain white spaces:

packs='apache2 php php-mbstring php-mysql'
sudo apt-get install $packs

or

packs='
apache2
php
php-mbstring
php-mysql
'
sudo apt-get install $packs

This will install the packages. If you double quote the $packs then it will throw an error.

Unquoetd $packs is sending all the space separated package names as arguments to apt-get, while quoting it will send the $packs string as a single argument and then apt-get will try to install a package named apache2 php php-mbstring php-mysql (for the first one) which obviously doesn't exist

See what, when and why for the basics.

We can just do simple replacement of separators from space to new line, as following example.

echo $sentence | tr " " "\n"

It'll split the value of the variable sentence and show it line by line respectively.