Scotch bonnet

Marasmius oreades

The Scotch bonnet is also known as the fairy ring mushroom. The latter name tends to cause some confusion, as many other mushrooms grow in fairy rings.
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Appearance

It grows gregariously in troops, arcs, or rings. The cap is 1-5 cm across; bell-shaped with a somewhat inrolled margin at first, becoming broadly convex with an even or uplifted margin, but often retaining a slight central bump; dry; smooth; pale tan or buff, occasionally white, or reddish tan; usually changing color markedly as it dries out; the margin sometimes faintly lined.

The bare, pallid stem grows up to about 7cm by 5mm in diameter.

The gills are attached to the stem or free from it, fairly distant, and white or pale tan, dropping a white spore-print. The spores, themselves, are 7-10 x 4-6 µ; smooth; elliptical; inamyloid. Cystidia absent. Pileipellis without broom cells.

This mushroom can be mistaken for the toxic "Clitocybe dealbata" which lacks an umbo, is white to grey in color, and has closely spaced decurrent gills.
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Distribution

"Marasmius oreades" grows extensively throughout North America and Europe in the summer and autumn, or year-round in warmer climates. It loves grassy areas such as lawns, meadows, and even dunes in coastal areas.
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Habitat

"Marasmius oreades" grows extensively throughout North America and Europe in the summer and autumn, or year-round in warmer climates. It loves grassy areas such as lawns, meadows, and even dunes in coastal areas.

References:

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Taxonomy
KingdomFungi
DivisionBasidiomycota
ClassAgaricomycetes
OrderAgaricales
FamilyMarasmiaceae
GenusMarasmius
SpeciesM. oreades