In the sentence " Her speech was punctuated with bursts of applause." why can't I use "by" instead of "with"?
I would prefer to use "by" here, because it is used for the agent ("bursts of applause") of the passive verb "was punctuated":
Her speech was punctuated by bursts of applause.
The active form of the sentence would be:
Bursts of applause punctuated her speech.
On the other hand, if you are describing what the one doing the punctuating is using for the punctuation, you use "with" and not "by":
She punctuated her speech with jokes.
Here "with jokes" simply refers to the things that occur as punctuations. "with" can thus be used in the original sentence but with a slightly different meaning:
Her speech was punctuated with bursts of applause. (as if the bursts of applause are 'part' of her speech)
Her speech was punctuated by bursts of applause. (the bursts of applause are not part of her speech)
For a better understanding of the difference compare:
Her speech was filled with scientific terminology.
*Her speech was filled by scientific terminology. (semantically out of place because scientific terminology does not go around filling people's speeches!)
Her speech was punctuated with bursts of applause.
The preposition with is often used to denote the instrument or means by which something is accomplished. Here by would denote the agent. With has been used because the bursts of applause don't really do anything; rather, they are being used by another party in order to do something.
Below is an example with both the agent and the means included, which may clarify the issue:
Her speech was punctuated by the audience with bursts of applause.
According to "oxford learners dictionaries", we use the transitive form of the verb punctuate as following: punctuate something (with something) to interrupt something at intervals