The answer to 'why is my mulch mud' is that the mulch is becoming saturated with water, causing it to turn into a muddy, sludgy mess. This is often due to heavy rainfall, poor drainage, or excessive irrigation in the landscaping.
Mulch needs to be able to drain well and not become waterlogged. When it gets too saturated, the organic materials in the mulch break down and turn into mud. This can be unsightly, make walking difficult, and even lead to mold and fungus growth.