Q. 1. Is is my understanding that the palms used on Sunday are Sacramentals. I don't know why they are called Sacramentals. How does one dispose of the Palm?
A. 1. As you indicated, the Palms that the faithful receive on Palm Sunday are Sacramentals as defined by the Catholic Church. "Sacramentals are sacred signs which in a sense imitate the sacraments. They signify certain effects, especially spiritual ones, and they achieve these effects through the intercession of the Church." [C.C.C. # 1166]
Palms that are used as "sacred signs instituted by the Church" become Sacramentals when they are blessed.
Palms, as Sacramentals, are to be treated with respect and reverence. "Sacred objects, set aside for divine worship by dedication or blessing, are to be treated with reverence. They are not to be made over to secular or inappropriate use, even though they may belong to private persons." [C.C.C. # 1174]
To dispose of Sacramentals, you can give them to someone to use them or burn and bury them in a respectful location where no one will be walking over them. If the object cannot be burned, it should be destroyed to the extent that it can no longer be recognized as a Sacramental so it will not be desecrated.
Palms are not easy to burn. You can return them to the Church so they can be burned and used on Ash Wednesday. If you wish to dispose of them yourself during the year, you can cut them in small pieces and bury them as indicated above.