In reaction to S Bengi and Bryan RedHawk,
Burying woodchips DO stunt plant roots when you plant directly in the woodchip layer, NOT because of the fungi but because of microorganisms that breaks the woodchips down. Micro-organisms use up a lot of nitrogen in the process of decomposing the woodchips, which they take away from the soil around them. When you put plant roots directly in this part of the soil containing the woodchips there might be a temporary nitrogen deficiency. Plants need nitrogen to be able to grow, thus this can lead to 'stunting' a plant.
