>> I read just yesterday that using wood chip mulch in the garden is OK at first but soon, with watering, it will mat like cardboard and prevent water from quickly seeping into the depth/roots.
My theory, FWIW, is that that applies mostly to fine shavings, very small chips, and mixes with sawdust.
Those can mat down and interfere with water penetrating. Or (sawdust) absorb so much water that only the very heaviest rain can saturate it and reach the soil, at all!
But coarse wood chips on top of the soil are great for several years. When big chips start disintegrating, it's time to use them for pathways or feed them to the compost heap.
P.S. Nothing used as top mulch can cause nitrogen deficit in the root zone. No matter how much some fungus or bacterium wants to digest the wood it is clinging to, it can't suck N up from the depths. At the most, it might deplete N in the very top 1 mm of soil.
No problem.
