Each mined block will earn you one unit of Glowing Mushrooms, but no additional blocks, even though the Mushroom block looks like Siltstone.
These mushrooms can also be obtained as random drops or pet-harvest from Mirus.
Glowing mushrooms cannot be placed, instead they will be eaten by the player-character if used with right-click from a quickslot.
Glowing mushrooms can be consumed either from a quickbar (drag it there with the mouse-cursor by holding left-click from your inventory if needed) with right-click, or by dragging them with the mouse-cursor by holding left-click from the inventory over the character's model in the equipment-window on the right side.
Glowing Mushrooms - like other Mushrooms - will heal 280 health points of 1000 maximal health (shown on the red bar) over time for ca. 15 seconds (indicated by a heart-symbol on the left side of the screen).
Cooldown: once a Glowing Mushroom was consumed and the healing-effect starts, you cannot immediately consume another glowing mushroom, but will have to wait until the first one has finished its healing effect - 15 seconds as mentioned.
However you can consume other mushrooms (Brown Mushrooms, Red Mushrooms), Potions and/or Food while the healing-effect of the glowing mushroom is still ongoing. You can also use the healing effects of Mineral Water and/or Healing Beacons while being healed by a glowing mushroom at the same time.
Currently (R41 in April 2017) glowing mushrooms are necessary for crafting Iron Mining Cells with no alternative options.
A number of crafting-recipes are currently (R41 in April 2017) demanding Mushrooms of any kind, indicated by blue arrows on the Mushroom icon in the crafting recipe. You can click on these icons to choose the type of Mushrooms that you want to use for the crafting recipe.