Vermiculite has the excellent property of improving soil aeration while retaining the moisture and nutrients necessary to feed roots, cuttings, and seeds for faster growth. Vermiculite is permanent, clean, odorless, non-toxic and sterile and will not deteriorate, turn moldy or rot.
Vermiculite is made of a mined material. In it's natural state it resembles mica rock. It undergoes significant expansion when heated. Exfoliation occurs when the mineral is heated sufficiently, and the effect is routinely produced in commercial furnaces.
Vermiculite holds water, yet drains when it's filled, just like a sponge does. The plant roots grow around the particles and take in whatever moisture they need and since the particles of vermiculite take a long time to dry out, moisture is always there for the plant enabling it to grow quicker and more healthy.
The major drawback of vermiculite is that it retains too much water to be used by itself. It can suffocate the roots of plants if used straight.