The winding binding
is there to help prevent any movement in the wires, either from vibration or from current flow changes in the wires causing movement from magnetic forces. (assuming it's bound tightly)
The paper or other lamination/winding separator is there to prevent the winding insulation from being damaged by the sharp edges of the laminations, primarily during the process of winding, but also in the event of any vibration or other movement of the windings.
If the binding fails and allows vibration, and the separator is not present, then over time the winding insulation can wear against any of the lam edges it is pulled up against, and if it cuts thru that on one, it just shorts that winding to the stator (and thus the frame in most motors/bikes). But if multiple lam/winding shorts occur, you end up with phase-to-phase shorts.
It's likely that none of these shorts will be direct low-resistance shorts, but rather tiny gaps that can be crossed by high voltage (like the pulses of battery voltage applied by the controller), which may not actually blow anything up, but could cause incorrect operation or controller shutdown for well-protected designs (but could jsut plain destroy common ones). This is what I experienced some years back testing the SFOC5 with an MXUS 450x that turned out to have a single-phase lam/winding short, which was only verifiable using this:
Regarding the mold/mildew itself...I can't actually imagine how it would grow in there on the metal surfaces without some kind of organics to feed on. (maybe oil?)
I would expect some corrosion from enough humidity to allow mold/mildew, though, given the other circumstances I have typically seen that--except for one: "tree rust". There's a black mildew I've seen on tree branches that kills the bark layer and causes it to shed (killing the branch), which grows here in Phoenix AZ even in very dry weather. Everywhere else I see that kind of thing, it's wet or at least damp...but in this case it must be feeding on the moisture of the branch itself, though this is much lower than that of the other places I see it (it's probably a different "species").