Composting toilets are dry toilets that do not use any water. Instead they use aerobic processing to treat the waste. Sawdust, peat moss and other elements are mixed with the waste to start the aerobic process, absorption of liquid and to take care of the odor. Human waste is about 90% water, which is evaporated. This leaves you with one of the major benefits of a dry composting toilets is that they produce nutrient rich compost that can be used for agriculture if properly treated. The other major benefit is that they use no water relieving stress on that resource.
There are four major parts to a dry composting toilet.
This is where the natural process of decomposition and evaporation begins to take place. Sufficient oxygen is needed to promote the aerobic process. This is also where additives such as wood chips, sawdust, and peat moss are added to help with the absorption of liquid and mitigate odor.
This makes sure that the decomposition process in the toilet is aerobic and to vent odorous gases.
Since 90% of human waste is liquid the excess liquid is removed to ensure aerobic composting.
After decomposition and the drainage of excess liquid is complete you are left with nutrient rich compost.
Composting toilets are not pit latrines. Unlike pit latrine composting toilets convert the waste to a dry and odorless byproduct. Unlike pit latrines that have no fecal sludge management component that allows for odor and insects.
Here is an informative video regarding composting toilets from Enviro Loo Waterless Toilet System that we have no affiliation with but it has some good information and gives a good outline on how these types of toilet work.