It is the product of the decomposition process using various species of worms, usually red wigglers, white worms, and other earthworms. So, option 4 is correct.
It is done to create a mixture of decomposing vegetable or food waste, bedding materials, and vermicast.
The rearing of worms for this purpose is called vermiculture.
Vermicast (also called worm castings, worm humus, worm manure, or worm feces) is the end-product of the breakdown of organic matter by earthworms.
These castings have been shown to contain reduced levels of contaminants and a higher saturation of nutrients than the organic materials before vermicomposting.
Vermicompost contains water-soluble nutrients and is an excellent, nutrient-rich organic fertilizer and soil conditioner.
It is used in farming and small scale sustainable organic farming.