When the trees are first debarked the mulch is fairly fresh, and needs to decompose before we dare use it around our plants. The decomposition process requires air flow and oxygen into the pile. This air flow cannot take place when the mulch is compacted too tight, and the mulch continues to decompose it becomes extremely hot as the organic matter ferments. Sometimes the extreme heat combined with the inability to release the heat can cause the pile to burst into flame through spontaneous combustion.
When the mulch heats up, cannot release the gas, and the mulch actually becomes toxic. The mulch develops an overbearing odor that will take your breath away as you dig into the pile. When you spread this toxic mulch around your plants the gas it contains is released, and this gas can and will burn your plants.
The gas, not the mulch, turned the grass brown next to the mulch pile. Some people spread several yards of the mulch around their house before they realized the problem, and it ruined many of their plants.