For compost, and other organic matter, to be of benefit it needs to be in the soil. That, however, does not mean you need to till it in. When applied as a mulch organic matter will be slowly worked on by various soil bacteria and fungi and incorporated into the soil over time. A much slower process but one that has been going on for many years.

Like to so many questions the answer is "it depends"! What type of garden do you have - veggies, perennials, annuals, shrubs?

IMO when using compost on top of the soil both rain and irrigation water will wash the beneficial organisms and nutrients from the compost into the soil fairly quickly and earthworms and other beneficial soil organisms will use it and plants will benefit from it.

Of course mixing finished compost with the soil *may* provide benefits faster (especially in a veggie garden) but if adding compost regularly I doubt it makes a lot of difference.

I'm always looking for ways to make gardening easier so using my mostly unfinished compost as mulch in my perennial garden has always worked well for me and I have a large population of earthworms.

If you want the lower level of soil improved, you have to dig and mix it in. If it just sits on top, you will improve but if you then dig down you will notice the improves end near the surface. If you plant a big plant you want to improve as big you dig the hole anyway, so I just improve when I plant. It does make it any more work to improve when you are already digging.

Most plant "feeder roots" are in the top few inches ... so any nutrients leaching down as it rains or as you water will reach those roots.

I just keep topping things off and eventually the compost will dominate the veggie bad.

The primary soil cultivators are earthworms. The amount of soil they move in a single season is astonishing. Thus, compost works beautifully as a top dressing.

It really depends on what garden types you have.
I use this info graphic to understand more of the art of composting. It is really useful, you should check it out.
http://agrilicious.org/agrigraphics/how-to-compost

Here is a link that might be useful: Agrilicious

"It really depends on what garden types you have."
Not really. All soils and all gardens will be better with organic matter, although some plants will grow better is meaner and leaner soils, ie. very little or no organic matter.

Agrilicious looks like a nice website but the linked graphic is a basic composting tutorial and does not address the question at hand.

I use compost as a top dressing/mulch around garden plants in summer. Usually I will put the most composted stuff down first (i.e. compost if I have it), then partially composted stuff, followed by a mulch of uncomposted leaves/grass clippings/wood chips/sawdust mix. A feeding mulch. The theory is that worms will come up from the soil into those moist bottom layers and they will further decompose and be transported into the soil by the worms and leaching action. It seems to work - by fall it's pretty much gone with bare soil peeking through. I don't always have every layer to use, so I use what I have.

For many years, once the soil had adequate levels of organic matter, I would heavily mulch with compost and shredded leaves (4 to 6 inches in depth) in the fall (October) and by August that material would be digested and bare soil would be visible. The Soil Food Web had worked that organic matter into the soil. I also noted that some of the wood chip mulches would not last the 3 to 4 years on my soil that they would on other peoples soil and others, with a less active Soil Food Web, would have the shredded leaf mulches lasted much longer, until that soil had an active SFW.
The link Mackel provided refers what I have been trying get people to understand for years.

Here is a link that might be useful: active soils

This post was edited by kimmsr on Fri, May 30, 14 at 6:58

No, compost does not have to be worked into the soil. Eventually it will "become" your soil after you have applied a sufficient depth over a few years. Tilling the compost, or just disturbing the soil, repulses the worm population, which is essential to a healthy soil.
In my personal experience, I've decided to till a site a few feet wide to get rid of the the uber-invasive lilies of the valley and replace them with other plants. Now their roots are soooooo strong that tilling really was necessary, and I worked in good compost, however the worm population completely left.
After a few weeks however, with keeping the ground moist, the worms returned in full force.

Although, since this area was pretty small, worms could easily move in. I would not endorse such vigorous tilling on a very large site since it would take too long for the worms to migrate back. You may consider placing some compost in every hole when you plant transplants. In addition to the top dressing, you also have underground nutrients then.

Thank you everyone for your comments. You have been helpful.

Add me as a vote that there is no "must." Reasons to do it though would be low organic content in the underlying soil and you are in a hurry.

As mulch breaks down, chemicals go right down with every rain or irrigation. That is probably the main transport to roots, though worms etc do their work as well.