Loose-leaf tea is typically higher quality than bagged tea because it is made from higher-quality tea leaves that have not been broken down during the processing. Loose-leaf tea has a much fresher and more intense flavor than tea that comes in bags. The leaves are able to expand and infuse more of their natural oils and aromas into the water, resulting in a much more flavorful and aromatic cup of tea.
Additionally, it is more environmentally friendly as it doesn't require the use of paper or plastic tea bags. Loose-leaf tea also offers a more customized experience as you can adjust the amount of tea to your personal preference.
Teabags are usually made from the opposite – low tea grades, such as dust and fannings. Dust and fannings are smaller pieces of tea, so they have a larger surface area than whole leaves. A larger surface area means more opportunities for the essential oils (what makes tea flavorful and aromatic) to evaporate, leaving the tea dull and stale. Freshness can be a major issue with typical teabags for this reason, especially if they are packed in a paper box with paper wrapping.
When you steep loose-leaf tea, it has (or should have) room for tea leaves to absorb water and expand as they infuse. This allows the water to flow through the leaves and extract a wide range of vitamins, minerals, flavors, and aromas from the leaves. When you steep tea in a teabag, its infusion is limited by the size of the tea bag. Packing full-leaf tea into a small tea bag won’t yield a very flavorful cup.
For many years, the teabag industry adapted tea to the tea bag. By filling teabags with smaller particles of tea (rather than whole leaves), the surface area and infusion rate of the tea were increased. A more flavorful (though not particularly nuanced) brew resulted. It was cheap, easy, and good enough for your average “milk and sugar” tea drinker, so it was successful.
