A fungus is actually a primitive plant. Fungi can be found in air, in soil, on plants, and in water. Thousands, perhaps millions, of different types of fungi exist on Earth. The most familiar ones to us are mushrooms, yeast, mold, and mildew. Some live in the human body, usually without causing illness.
Fungal diseases are called mycoses. Mycoses can affect your skin, nails, body hair, internal organs such as your lungs, and body systems such as your nervous system. Aspergillus fumigatus fungi, for example, can cause aspergillosis, a lung disease.
Some fungi have made our lives easier. Penicillin and other antibiotics, which can kill harmful bacteria in our bodies, are made from fungi. Other fungi, such as certain yeasts, also can be helpful. For example, when a warm liquid, such as water, and a food source, such as sugar, are added to certain yeasts, the fungus ferments. The process of fermentation is essential for making healthy foods like some breads and cheeses.
This was taken from the booklet "Understanding Microbes in Sickness and in Health" from the National Institute for Allergy and Infectious Disease. You might also want to see the HealthyNJ pages on Yeast Infections and Fungal Meningitis.