If I wanted to make a bunch of compost, can I just throw some organic stuff on the ground and let time take care of it, or are there extra steps I have to take?
That's just the item's icon background. You'll need to wait 12h for it to properly decompose. And since 8.3, it does become compost rather than garbage, now.
It's actually intended to show if its compostable, but it's not correct for every item.