Recycling
Biodegradation is a natural process. In nature, wastes from dead plants and animals are consumed by microbes to get the energy they need to grow and reproduce. In effect, they're taking material that other living organisms can't use and recycling it -- returning it to the food web in a different form. A surprising array of microbes can accomplish the same feat with chemicals like pesticides - compounds that serve no use for plants and animals.
Water and Air
The microbes who perform these essential jobs need water to survive; most of them need oxygen as well. They also require nitrogen, phosphorus and other vital nutrients. If these requirements are not met, compounds that would ordinarily biodegrade may fail to do so. The interior of a landfill, for example, is an oxygen-poor environment that doesn't favor biodegradation, so it will greatly slow the process. Some other compounds like polyethylene are so microbe-proof they are completely resistant to biodegradation.
Products
Microbes use the material they degrade as a source of carbon to increase their own biomass. They also oxidize it to CO2 and water to provide energy for their own growth. For many bacteria in oxygen-poor environments, the ultimate byproduct of their metabolism is methane, CH4, rather than CO2 and water. These so-called "methanogens" are important in degrading oil and other hydrocarbons found in oxygen-poor environments.
Importance
Biodegradation is critically important to human society, since it helps deal with otherwise intractable pollution problems. The 2010 oil spill in the Gulf of Mexico, for example, became food for an army of microbes who slowly gobbled up large quantities of the oil. Helpful as they were, these microbes were still unable to deal with the heaviest hydrocarbons in the oil -- the residue called tar. Human sewage and manure from human agriculture are likewise recycled by microbial activity.