Yep, exactly! Fresh bodies take up more space in the pit. As they decay into skeletons, bones, and eventually humus, they shrink and the pile settles.
Slower decay keeps that extra volume around longer, making the pit easier to fill. The trade-off is that souls are released when decay starts, so you have to wait longer for them too.
That could definitely be clearer in the upgrade description — thanks for pointing it out!