Wood chips can be added to compost, where they will break down and add nutrients. If you have an unused area in your garden that you don't know what to do with, a thick layer of wood-chip mulch is a good interim measure. It'll keep weed growth down and the soil moist until you know what you want to do with the area.
The benefits of proper mulching include the following: Conserves soil moisture by increasing water infiltration and slowing evaporation. Improves soil structure, fertility, and aeration as it decomposes. Moderate soil temperature