The fungi, which are spread by airborne spores liberated from the toadstools, form colonies below ground in the root zone of the turf. Most cause little damage and are only noticed when they produce fresh toadstools.
Marasmius oreades is the most important fungus which forms fairy rings. Its mycelium spreads gradually outwards, dying out in the centre, so that the colony is a roughly circular advancing ‘front’ of fungus growing through the soil.
The extent, if any, to which the fungal mycelium actually kills grass roots directly is unclear. However, the mycelium is water repellent and patches of water-stressed dead grass may appear in drier weather. As the dead grass decays it liberates nutrients, so that greener-than-usual areas occur next to the dead ones. Since the colony is an expanding front it is approximately ring-shaped, and therefore when conditions are suitable for toadstool production, these also appear in rings.
Colonies expand by about 30cm (1ft) per year, and in large areas of turf may exist for hundreds of years.