In Italy (and in most countries I've visited), waste sorting typically involves two distinct categories for compost and residual waste.
Question: Why is compost disposed of in a separate collection rather than with residual waste? Are there any environmental differences if it decomposes together with dry waste versus separately? Is it a matter of disposal efficiency, or is it simply another administrative complexity?
Rules for the "compost waste" doesn't apply for making the compost that you use as a fertilizer. Maybe that's why we call it "wet". It's basically anything that is biodegradable. But not everything that is biodegradable is ok for fertilizing...
Residual waste is mostly plastics. Isn't that obvious that you don't want that together with compostable material that will be used to make compost or at least something like biogas?
And it also works in reverse: compostable material is usually relatively wet... so if your residual waste ends up in a waste incineration plant, all that water would be very problematic for burning the waste.