It hasn’t really been replaced, it’s still there. What does happen is it breaks down into smaller and smaller pieces causing it to take up far less space than it did when you planted with it. Also, as someone else said, the roots fill in the air pockets.
Good potting soil should be fairly light related to it’s volume. This allows it absorb water like a sponge. To do this, chunks of bark or other porous woody material (like coconut husks) are added to the mix. As the plant grows the root fibers grow into and break up the chunks. The more roots the finer the soil be in the end.
To reuse old potting soil like that you do have to add quite a bit back to it, but this is to restore the texture, absorption properties, and nutrients. The nutrients are the only part the plant “eats.” When I restore old soil I only add about 1 cup per cubic yard of nutrients. Compared to about a 1 to 1 ratio of old soil to new filler (peat moss, coconut, bark, etc.)
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