Mulching lawn mowers are equipped with a deck and blade that provides multiple chops to the turf blades. There is no immediate discharge of cut grass blades so they remain inside the mowing chamber to be repeatedly chopped until they fall to the ground as the mower rolls over the lawn.
With a regular mower blade on a typical mower you have a 1" — 2" leaf blade lying on the grass after being cut. The problem with these long blades is that they don't filter down between growing grass blades to the soil where they can decompose quickly. Instead they sit on top, dry out in the sun and generally look bad.
Discharging clippings to the side distributes the longer clippings across the surface of the lawn, but they are still resting on the top.
Mulching mowers re-cut the grass multiple times reducing its overall length to about 3/8" — 1/2" which falls to the soil's surface and decompose. How this is done is with a bit of aeronautics and restriction. By removing the outlet the grass blades would normally be discharged through, causes the cut grass blades to remain inside the mowers deck cavity. The blade and deck have some slight modifications that cause the long grass blades to circulate upward instead of down and out.
As the mower propels forward, more and more blades are being cut until there is no room left in the circulating chamber. This forces the finely cut blades down into the mown lawn and onto the soil.
Wet or damp lawns reduce the efficiency of this design by making the grass blades more likely to stick together, and less likely to float around inside the chamber. This results in the unattractive clumping of cut grass. Therefore, for mulching mowers it's important to only mow completely dry lawns, and to strictly follow the 1/3 rule where you're only removing no more than 1/3 of a blade of grass during one mowing.
Mulching mowers require more frequent blade sharpening as they are doing 2x 3x 4x more cutting that a regular blade.
Mowing the grass about 1/2" taller than normal will aid in hiding the mulched clippings.
Reduce the forward speed slightly for improved results. This provides a little more time for the blades to do their job.
Mulching lawn mowers return many nutrients back to the soil. In time this will produce a healthier lawn, with less fertilizer being required.
Mulching like composting, reduces the amount of material going to landfills.