Most of the stuff we dispose off are biodegradable, which means that they eventually break down by bacterial processes in nature. Plastic as an example, is biodegradable but it can take a very long time for it to completely break down to its main components.
Composting on the other hand is the process of recycling organic waste so that it can eventually be reused.
The important distinction is that compostable products do not always biodegrade naturally. They have to be placed under the right conditions in order to decompose. If not under the right conditions, such as in a regular landfill where there is no oxygen supply, compostable products will take much longer to break down. It is therefore imperative to place compostable material into the correct waste bin for compostable and not recyclable items.
That said, compostable packaging is better for the environment but consumers have to make sure to dispose it off properly.