Plant roots need room to breathe, even under the soil. Rocks or other debris in the soil can create air pockets, as can paths created by burrowing worms. But if your soil is too densely packed for the roots to breathe, adding vermiculite can help create the air pockets the plants need. You must turn the vermiculite about 6 to 8 inches into the soil for it to be effective with aeration, but this can help break up the soil's density. If your soil is mostly clay, however, using vermiculite isn't a good idea because then it can retain too much water.
Sandy and loamy soils tend to let water drain quickly away from plant roots. If you need your soil to hold more moisture, adding vermiculite can help. Vermiculite absorbs water almost like a sponge and releases it back into the soil gradually, giving water back to the plants. This is especially helpful in hot weather when the soil tends to dry out faster.
Seeds need constant moisture to germinate, and vermiculite helps soil retain moisture so you don't have to water the seeds constantly. When you're trying to grow new seedlings, use vermiculite, or a mixture of vermiculite and compost or garden soil. Vermiculite doesn't provide any nutrients for the seeds and new plants, so you still must fertilize regularly, but it holds the moisture around the seed to help it germinate faster.
Although you can grow plants in pure vermiculite, it's best to create a mixture that covers all the plants' needs -- moisture, air and nutrients. When germinating seeds, a 50/50 mixture of vermiculite and soil or compost is best. For other garden applications, 25 percent vermiculite to 75 percent garden soil is usually enough. This is typically adequate to change the soil's composition while giving the roots access to nutrients in the soil.