mainly the worms turn it in to nuterants, they eat it''

also the various categories of bacteria that swap the nitrogen compounds into more useful compounds. its difficult to give a full answer in a short space .
there is a microcosim of organisms in the soil.

much better answer than mine SBG

thanks i suppose i have an 'unfair' advantage due to my ecology/biology background.

and you are proberly better looking than me lol.

There are whole books on this process, answering it in a few senetences on here is almost impossible. There are three main components, fungal action. bacterial action and animal action. The world is full and I mean FULL of fungus from microscopic to the largest living organism (a Fairy ring type mushroom in America which is one organism and is miles across) These fungi attack organic material and break it down into various compounds. Bacteria both eat the original organic material and also the compounds produced by the fungus. Worms, slugs, insects, nematodes etc. all eat either the organic material, the fungus, the bacteria and excrete material which is further attacked by fungi and bacteria. Eventually the process results in the breakdown of the material into simpler compounds and that magic stuff which no one can exactly define 'humus'.
And before I am attacked for this posting I know that I have over simplified the process by a long way.

thats why i kept it brief :o)