This is, if not an FAQ, at least an OAQ, (an often asked question). The differences between compost and mulch are as follows.
Compost - is properly broken down waste material containing essential nutrients and minerals, which will help cultivate your soil and aid your plants, be they flowers or vegetables, to grow healthily.
Compost helps prevent soil erosion and helps the soil retain moisture.
People often pay for compost, buying it from garden centres, farm shops and so on, but using a chipper/shredder and a compost heap, you can start the satisfying process of making it yourself.
N.B. Remember, a shredder does not actually make compost, but it does start the process by breaking down waste into particles that will compost more easily.
Mulch – There are different kinds of mulch but very basically, mulch is broken down material, which is not decomposed. Like compost, mulch can prevent erosion of the soil and help retain moisture.
Mulch can also protect seeds and seedlings from frost and will prevent the growth of weeds.
Mulch should sit on top of the ground, above the soil and not too close to stems or roots so it doesn’t take valuable nitrogen away from your plants as it breaks down.