umhüllen
to wrap
To completely wrap, cover, or enclose something or someone, often with something soft or protective.
Sie umhüllte das Baby mit einer warmen Decke.
She wrapped the baby in a warm blanket.

to envelop / wrap
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to wrap
To completely wrap, cover, or enclose something or someone, often with something soft or protective.
Sie umhüllte das Baby mit einer warmen Decke.
She wrapped the baby in a warm blanket.

'Umhüllen' is an inseparable verb. The prefix 'um-' remains firmly attached to the verb in all sentence forms, and the past participle is formed without 'ge-' (umhüllt, not umgehüllt).
Der Nebel umhüllt die ganze Stadt.
The fog envelops the whole city.
The verb is derived from the noun 'die Hülle' (the cover, the wrapping). The prefix 'um-' means 'around'. So 'umhüllen' literally means to surround something with a covering.
Die Raupe spinnt sich eine Hülle, bevor sie zum Schmetterling wird.
The caterpillar spins itself a cocoon before it becomes a butterfly.
If you want to say what something is wrapped with, use the preposition 'mit' followed by the dative. The object that is being wrapped is in the accusative.
Die Mutter umhüllte ihr Kind zärtlich mit einer weichen Wolldecke.
The mother tenderly wrapped her child in a soft wool blanket.
In its figurative meaning, 'umhüllen' is often used with abstract nouns such as 'Stille' (silence), 'Dunkelheit' (darkness), 'Nebel' (fog), or 'Geheimnis' (mystery). These then surround a person, a place, or a situation.
Eine geheimnisvolle Aura umhüllte den alten Mann.
A mysterious aura enveloped the old man.
to surround
'umgeben' and 'umhüllen' can both express that something is all around someone or something. 'umgeben' describes the position more: things are located around it. 'umhüllen' more strongly means that something covers something or lies around it like a covering, often in a soft, dense, or protective way. That is why 'umhüllen' fits well with fog, fabric, warmth, or a blanket. The words can be confused because both describe enclosing something from the outside. In practical terms: trees surround a house, but fog or a blanket envelops something.

Am Morgen umhüllte dichter Nebel die Felder.
In the morning, thick fog enveloped the fields.
Viele alte Bäume umgeben den See.
Many old trees surround the lake.