Alternating layers of mud and sand depositional environment?

As Busterwasmy cat stated, it is a transitional environment, however it can be transitional to almost every sedimentary environment that exists outside of carbonate regimes. It could be Barrier Island, Delta Front, Lake sediment, Submarine canyon system, Chenier Plain, Floodplain...literally almost anything unless in total isolation. You need to know what the overlying and underlying sediments are within the sedimentary sequence in order to establish environment.

Variations of that sort imply a marginal environment, a transition zone between higher energy and lower energy conditions (near shore or floodplain environments are possibilities). There are a few situations (abyssal plains, say) where the environment is not marginal but punctual high energy events can transport sediments sufficiently far to cause such depositional behavior.

Gravel is absent simply because there is no nearby very high energy environment. The common occurrence of very high energy conditions tends to cause the removal of the very low energy deposits, so it is fairly uncommon to have such large disparity in granulometry of sediments. gravel and sand, sand and silt, silt and clay, but very rarely gravel and clay. It can happen but it is uncommon.

Maybe a lake or low energy stream in a semiarid region.