Compressed insulation is put thru a blow moulding machine to fluff it up and make it better. It can be blown thru a hole in a wall in order to add insulation where there wasn't any, or it can be blown into a half finished attic to add insulation ( or more insulation, if necessary ). Many times a special kind of blanket is put down and the blow in insulation is blown in through a slit to keep it from going where you do not want it. Then you simply seal the slit and your insulation is contained.
Professionals have the best blow molding machine and enough experience to do these sorts of jobs quickly and easily. But if you are a do-it-yourself type person it's also possible to rent the correct equipment and purchase the blow in insulation so you can do this project on your own. You will find instructions on the web if they don't come with the insulation or gear.
Blow in insulation comes in four different sorts : fiberglass, rock wool, cellulose, and vermiculite. The fiberglass insulation has the best insulation properties, so you will need less of it than the other types, while it is rather more expensive usually. Both Owens Corning and Johns Manville sell this type of insulation. Cellulose insulation is sometimes put on top of fiberglass insulation to exploit the best properties of each type. It's also used alone, though it does take more of it to get a similar effect as you would with fiberglass. Newspaper is treated so that animals and pests are less likely to use it or attempt to eat it, as well as to make it more fire resistant, to make this type of insulation.