Mycelium

"In Minecraft, mycelium is represented as a type of dirt block, covered in grey-purple strands and emitting strange particulates. Predictably enough, mycelium blocks occur naturally in Mushroom Island biomes, and though they aren’t very good for growing most crops - they can’t even be hoed into farmland - mushrooms spread here easily, and in any light level."

- Marsh Davies

Mycelium is a variant of dirt that is found naturally in Mushroom Fields biomes. It has a particle effect that resembles tiny spores being released constantly from the surface.

Natural generation
Mycelium generates naturally in mushroom fields.

Post-generation
A mycelium block can spread to any dirt block within one space above, one sideways, or three down. The mycelium needs light level 9+ above it and the dirt needs light level 4+ above it, and must not be covered by any light-impeding block or any opaque block. Mycelium reverts to dirt when covered by one of the light-impeding blocks above and the light level at that block is below 4.

If there is a plant on a dirt block when mycelium spreads to it, the plant will pop out and drop as an item.

Obtaining
Mycelium can be obtained by mining it using a tool with the Silk Touch enchantment. If mined with any other tool or by hand, it will drop dirt. A shovel is the fastest tool to collect it.

Endermen
Endermen can pick up mycelium blocks, and will drop the block they are holding if killed.

Effect on plants

 * Mushrooms can remain on mycelium blocks in any light level, unlike the situation on other blocks, where mushrooms are broken (dropping as items) during block updates in high light.
 * Huge mushrooms can grow on mycelium, just as they can grow on dirt, grass, or podzol.
 * Mycelium cannot be tilled with a hoe to make farmland. Saplings, flowers, grass, shrubs, ferns and sugar cane cannot be planted on it, and pumpkins and melons will not grow on it.

Trivia

 * It is a common misconception that only mooshrooms can spawn on mycelium. This is not true; it is the biome itself that prevents other mobs from spawning. Friendly and hostile mobs can spawn on mycelium in any other biome just like they do on any other block. Relatedly, mycelium outside of a mushroom biome will not spawn mooshrooms.
 * The spore particle effect is called "townaura" in the game code.
 * In real life, mycelium is the part of a fungus that gathers nutrients, comprised of web-like threads known as hyphae. Mycelium can be considered the roots of a fungus, whereas the mushrooms can be considered the fruits.