The short answer: is complicated. The mushrooms that you may see associated with your trees, lawn, mulch and even house plants are the fruiting bodies of certain fungi.
Fungi develop a microscopic network of structures underground, associated with trees and other plants, and often embed in the soil and wood. These networks are composed of thread-like fungal structures known as hyphae, and as it grows and multiplies, this network is called mycelia.
Mycelia develop in circles, and therefore in certain cases, you can see mushrooms growing in a radius. For example see Fairy Rings in Lawns.
When environmental conditions, such temperature and humidity are favorable, fungal fruiting bodies form and spores develop within the mushroom.
Some mushrooms may be associated with living or declining trees and may have the appearance of brackets or conks. Some of them can cause wood decay.
Mushrooms may also develop in tree stumps. Once established in the tree or tree stump there is no cure or treatment available. The mycelium is located within the wood and extracting nutrients from it. Mushrooms and fungi, in general, are one of the many nature's recyclers.
If you are looking for help identifying a mushroom visit our Mushroom Identification page.