I think that it is probably a combination of four reasons.
The straw, as mentioned, definitely goes a lot farther when separated.
When straw is fluffed up, it gives an aerobic benefit to the
mulch system and to your soil, whereas the blocky compressed bail flake is largely an anaerobic system unto itself.
Fluffing it up allows a massive amount of ecosystem for spiders and other beneficial creatures, whereas large blocky flakes allows a minimum.
Fluffing it up gives surface area for dew collection, and rain or
irrigation penetration.
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