Shredded wood chips vs commercial mulch at Home depot
Do you mean fresh wood chips from a recently cut tree?
These can be used as mulch, but must be aged first for 6-12 months before being used as a mulch. Otherwise, they can rob the soil of nutrients as they begin to break down. They could be used as pathways or playground material.
The bagged or bulk commercial mulch has been aged already and is useful to keep moisture around roots, and shade out weeds. Around plants, it should not touch the base and should be no more than 2-3 inches thick.
Here are some FAQ's about mulch: http://extension.umd.edu/hgic/faqs-mulch