They break down faster that chunks or chips, so you can turn them into the soil after a year or two as a source of organic matter. Shredded bark costs less than bark chunks. Shredded bark is high in carbon, so soil microorganisms draw nitrogen and other nutrients from the soil supply as they break the bark down. Shredded bark can float out of plant beds in a downpour. Fresh shredded cypress mulch may be toxic to seedlings.
Shredded bark is far less effective for smothering weeds than are bark chunks.
Compost is a fertile mulch you can make. It's an ideal soil-building mulch for vegetable gardens or flower beds that you plan to turn under. However, fully decomposed mulch is too fine to smother aggressive weeds. Hay and Straw are loose mulches, so they don't block air flow to the roots of plants. Both are good winter mulches for roses, strawberries, and other perennials.