For conceptual understanding, let us first refer to a definition of a composite material itself. According to wikipedia, composite is a material made of two or more constituent materials with significantly different physical or chemical properties which remain separate and distinct within the finished structure.
Wood plastic composite (shortened as WPC) is a composite material consisting of a thermoplastic polymer (as a matrix) filled with wood (or other lignocellulosic) fiber (as a filler), formed into the integrated whole in the presence and by means of chemical additives.
Can one consider WPC dry-blend to be a composite? Can not. Since the material structure was not yet finished. One should apply a high volume process, such as extrusion, injection or compression molding to form a whole material structure, during which wood (or other lignocellulosic fiber) is incorporated into the polymer matrix. If we miss to use additives, a natural filler can still be incorporated into the molten polymer however such a WPC would rather be an experimental aggregate than a commercial pellet or lumber product.
In terms of finished products, WPCs appear either as pellets (a feedstock for WPC lumber extrusion or injection) or as WPC lumber and timber products (e.g. decking) as well as injection or pressed molded items (e.g. flower pots, fencing post caps).
Wood-plastic composite (WPC) term is commonly used as a definition for almost all natural (ligno)cellulosic fiber filled plastic composites, whether they contain wood or any other fiber such as rice hulls, kenaf, flax, wheat or cotton stalks and so on. Whatever natural fiber is used as a filler, it typically appears in the form of pulverized (40-120 mesh) powder or, less often, as long fibers. Wood powder is often called wood flour.
The majority of commercial composite wood lumber manufactured today is based on three major industrial grade polymers - polyethylene (PE), polypropylene (PP) or polyvinyl chloride (PVC). There are basically two reasons. First, wood requires processing temperatures lower than 200C, and these polymers melt under lower temperatures, thus preventing wood from degrading / burning when processed. Second, market price for the polymers in question is comparatively low, especially if they are used in recycled form.
WPC additives can be divided into two major groups - functional additives and processing aids. The group names are self-explanatory. To put it simple, the former is in charge of WPC's physical & mechanical properties such as strength, flexibility, UV-resistance, fire resistance, weathering resistance an so on. The latter, being in charge of smoother processing, includes lubricants, compatibilizers, wetting agents, plasticizers (for PVC) etc. As a matter of practice, same additives can perform both functions.