Just A Bit Confused...

It entirely depends on the postal and customs regulations of the country in question.

In Australia for example, I don't need to stick on a label unless it's more than standard letter thickness or weight. If I don't send too many coins at once and I scrimp on the padding, I can get away with sending coins as a normal letter.

The Canadian rules and regulations are here. According to that, if the value is less than Can$20, they don't need to fill in a form. Additionally, if it's a "gift" rather than merchandise, the threshold value is increased to Can$60. If the item is above the threshold, they're supposed to fill a form in.

When I ship something to the US from Canada it has to have the customs label/declaration unless it is regular letter mail. Also, when using regular letter mail (if it is possible) I must say that the contents are paper. Clearly it is cheaper to send items this way (I don't have the prices in front of me, but a visit of Canada Post's website would give them) and there is no benefit to either parties to pay for small packet delivery - Canada Post would just receive more money. Over the last number of years it has gotten increasingly more expensive to send anything via mail - at least in Canada.

As long as the bubble envelope is under the weight and fits through the post office dimension slot, it can qualify for letter mail. The sender just has to state that the contents are paper ... assuming the post office clerk even asks ... or, for that matter, if the sender is used to doing this, they can just mail it themselves without involving the post office. It saves a fair amount of money and it doesn't appear as though customs ever checks.