If you are mowing correctly, with a good, sharp mulching blade, then the clippings should fall down into the grass and add nutrients and organic matter back to the soil. A mulch mower's blade is angled on the trailing edge, which lifts the clippings up allowing the blade to further cut the clippings into smaller pieces. Mowing correctly means cutting off no more than 1/3 of the total lengh the blade, mowing only a dry lawn, using a sharp blade, and mowing at one of the higher settings of the mower. So let's say you want to mow the grass down to 3 inches which is a good length for most cool season grasses. Then you should cut it when it is around 4 to 4.33 inches.(Since you are in Seattle, you can probably go lower in height due to the plentiful rain, but definitely not lower than the recommended mowing heights for whatever type of grass you have. Let's say 2 inches at the lowest for Kentucky bluegrass, and perennial rye, 2.5 inches for tall fescue). Cutting more than 1/3 of the blade is too stressful for the grass, plus the pieces might not get cut up small enough to make it down to the soil. Using the side discharge is not recommended as it leaves rows of grass clippings that can't make it down to the soil, and can have detrimental effects if it doesn't dry up and blow away. The dogs might pick up some clippings, but most of them will make their way to the soil as soon as they are cut.

Mowers when set up to mulch, with mulching blades installed, the discharge chute is either closed or blocked of with a mower specific discharge cover. This way the grass stays in the blades long enough to be mulched. One of the benefits of mulching set-ups is the fact that you do NOT have the rows of cut grass.

Some blades are better then others as far as how well they cut up the grass. When I switched to mulching, I did a lot of research and found the gator blade or craftsman's "gator" style blades had the best reviews & results.