Mushrooms are actually the fruiting body, or more probably more aptly, the flowers of the fungus running below it.  The fungus actually consumes decaying organic matter, and has been living on these organic matter for a while, before the mushrooms spout out of them.  The main purpose of the growth of the mushrooms is to release spores, thus, similar to a flower opening to release pollens, or a fruit, releasing its seeds.

After releasing these spores, the mushrooms typically fold up, or dry up.  Typically, for a mushroom farm, farmers harvest their mushrooms before these spores are released, thereby keeping the mushrooms fresh.

Although mushrooms naturally propagate using spores.  This method of propagation only works in thhe wild, or in some very controlled laboratory situations.  Typical mushroom growers 'clone' their mushrooms using 'tissue culture' in an agar mixture.  This is a more reliable method, specially when trying to mass produce and increase success rates of each mushroom colony.

Tissue culture for mushroom farms normally look like the above image.  Using recycled flat bottles to culture the tissue, these normally colonize the entire bottle in 1 to 2 weeks time.  These white growth is actually the roots or the mother of the mushroom fruits that we see.  Each particle is actually a clone of the adjacent.  So technically, if you cut them into pieces, under the right environment, they reproduce quickly and spread out fast.

Manila Mushrooms 
farming mushrooms in the city
www.ManilaMushrooms.com