Mushrooms appear sporadically throughout all Virtual Villager games. Only children can collect them. A Brown Mushroom contributes 6 food to the bin and it appears randomly along with Collectibles. They can disappear over time. Most mushrooms are brown while the rest are red and can give off tons of food. The red mushrooms are considered rare mushrooms. On Virtual Villagers 5, you can use one god power that makes mushrooms bloom on that area which cost 150 energies. This is also good for collecting rare mushrooms.
Mushrooms can be your source of food when you are running low on food. On Virtual Villagers 1 your berry bush might get depleted before you can get the ability to fish and get other food sources and mushrooms could help you survive... As long as you have children to collect mushrooms. On Virtual Villagers 2 the water could get polluted and the coconut trees might get depleted, too before you can grow crops and clear the algae. So good thing there are mushrooms to help you survive in all Virtual Villager Games.
Note: You cannot see mushrooms in Map view (Overview Map where you can see the entire village).
There is a glitch where if you place two (or more if you are very lucky) children on one mushroom, each one will pick up a mushroom, despite there only being one mushroom. This can be very useful when you are low on food.