The key to making a soft and flaky pie crust by hand is to avoid over-mixing the fat with the flour. A pie crust should be made by hand or in a food processor, and there should be visible lumps of fat in the flour before water is added.
When making a pie crust, it is best to create an even mixture of lumps of fat and pockets of pure flour. When water is added to this mixture, the pure flour absorbs water and form gluten. When the pie is baked, the fat melts and spreads out over the layers of developed gluten. This creates a pie crust that is made up of layers of crust and fat, and which is light, soft and flaky.
If the fat is over-mixed, the dough comes out smooth and pasty. In this case, the fat is distributed evenly throughout the flour and the resulting crust is gummy and tough rather than flaky.
To achieve the proper level of mixing, make sure the fat is cold before it is cut into the flour, and if using a food processor, be sure to pulse sparingly and check the dough often. The type of fat used is a matter of flavor preference and won't affect the texture of the crust.