Ship decomposers destroy everything within their box. The box is defined by the length of the sponge blocks, which extend from the iron block that the [shipdecomposer] sign is on. The items go into the chest under the sign. You need block access to break the blocks. The limit is 100 blocks in each direction. Past that it will not work and will need a new decomposer.
a lot of sponge 1x iron block 1x sign 1x Chest
They can also be used for terraforming and excavation purposes.
Using starship decomposers for things like mining and griefing is not allowed. This includes mining the shipwrecks in space. However, you may use them to toast marshmallows and to scrap ships brought to your base, or to fly around your base clearing wreckage.