Streusel, scones, biscuits, and pie dough are all made using the cut-in technique. This is a method of incorporating fat and flour together not by beating or creaming, but by crumbling. The butter and flour do not actually combine, but remain separate, the butter in small chunks floating within the flour. It should never look like a paste. This peaceful coexistence of fat and flour is the key to tender, flaky baked goods. In the oven the moisture contained within the fat evaporates into steam, pushing up the dough, and leaving little pockets of air that our mouth reads as flakiness.
I like to keep the butter in what I call pea-sized pieces. While they do not have to be round, they should be approximately that small. To get your butter small, but keep it from melting and joining with the flour into a paste, keep you ingredients cold. I like to freeze the diced butter before adding it, and if the temperature in my kitchen is particularly warm I’ll even freeze the flour for 10-15 minutes.
I prefer using my fingers to break down the butter because I can better monitor the butter size. Many bakers like to keep their hands out of it entirely, preferring to use a pastry blender, a couple of knives or forks, or even a food processor (a technique that requires mastery). When I use my hands I am careful to pinch the chunks with my fingertips, and not my big, hot hands.
(The pastry blender is a groovy little tool used to break fat into flour. It’s been used for decades, and I bet if you don’t have one, your grandma does. It consists of a bow of a few wires connected to a handle.)