Mulching a tree can be highly beneficial for healthy growth and adds appeal to your landscape. The mulch will help control weeds in the area and, since grass always loses in a competition for nutrients against trees and shrubs, you can take advantage of this situation rather than fighting to grow a lush lawn in an area where it will never succeed. However, when mulching a tree, do not make the mistake of piling mulch too high up a tree trunk, resulting in a 'mulch volcano' as it can be detrimental to the health of the tree. A “mulch volcano” is what results when you pile mounds of mulch right up to a tree trunk.
First of all, the tree bark gets constantly wet and suffocates the cells of the layer of tissue (phloem) that transfers food up and down the plant. When the tree gets weaker as a result of this, it becomes the target of harmful insect borers, fungi, and bacteria. Lastly, too thick a mulch layer can also prevent water from reaching the soil under the tree. So remember when you mulch a tree, the right way is to allow several inches of space between the trunk and the mulch. Then add mulch to a depth of couple of inches or so out as far from the trunk as you want.
Enjoy your landscape, and use mulch for all its many benefits, but remember to avoid those volcanoes!