As for the technique, there is only 1 rule. That rule is you must not put your hands out to break your fall as you risk breaking or spraining them, although having wrist guards will make it less painfull if you do end up putting your hands out.
And whoever told you that is a complete fool! The overiding subconcious movement is to throw your arms out, you can't really stop it and if you do your head is going into the tarmac/asphalt fast and hard.
Pad up, get some decent wristies and elbow pads, and when you fall (if you're going forwards), use the wristies to slide on (and the elbow pads will stop road rash on your elbows). Of course allow you arms to move with the fall, don't lock them as that will cause a break or dislocation like this:
Backwards fall with no wristguards, locked elbow which took the entire force and as such popped, fracturing one of the smaller sections.
I guess the best examples of falls and how to prevent injury are on video...
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There's 2 in there (0:56 and 1:20), watch how people fall and how they take the force
As for does falling hurt?
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After every fall we got up and carried on, no injuries or damage. 2:10 shows quite a good way to come out of a forwards fall.