There are two types of rot. The one in the picture seems more due to mishandling and/or poor storage than the disc just organically disintegrating. This disc isn't necessarily all gone either, but it probably causes reading problems with a bunch of drives, as the label side of discs has a reflective coating on the other side. The coating helps the laser bounce back so the optical drive can actually read the data, but it isn't strictly essential for the function of the disc. I recall a few years ago some artist released their album on completely transparent discs, and it worked for the most part, except some drives had a really hard time or were straight up incapable of reading the disc. In situations where the label side suffers minor damage, you can usually help the situation by putting something like nail polish (or anything semi reflective and something that doesn't shift the weight of the disc badly) on the label side scratches so the laser has an easier time.

As an additional issue of label side damage, CDs specifically are more vulnerable because the data layer is closer and less protected under the label. A good scratch can cause damage directly to the data layer, which you can't fix. If the read side gets scratched, you can still often resurface the disc with good results as scratches rarely are so deep that they get into the data layer. DVDs and Blu-rays aren't similarly vulnerable.

The second type of rot is rarer but matches more closely to what people think when they hear "rot". If the disc was manufactured poorly, stored poorly, or has suffered physical damage, the integrity of the disc can be poor and lead to the different layers delaminating. With delamination you now have gaps that allow moisture and bacteria enter inside the disc (usually from the edges), which basically means you now have an improvised petri dish on your hands. If it's manufacturing related, usually these discs start to rot fairly soon (5-10 years). A secondary but less common disc rot would be that instead of moisture and bacteria destroying the disc you can have oxidization harm the inner layers, but I believe it also usually requires similar type of delamination damage to occur. I don't remember if oxidization can also affect all disc types or just some.