What is this stuff, we've had about 5 straight days of rain and with it lots of mushrooms have sprouted up in addition to this weird fungus... What is it and how do I treat/get rid of it..
It's mycelium which is the fungal structure for many turf diseases, but also commonly found on decaying organic matter. It's primarily a function of the rain and summer temps. As the leaf blades showing in this picture still appear to be healthy, I'd suggest you just keep an eye on the area. A turf disease commonly associated with this type of mycelium is Pythium. I'd suggest you check into it and become familiar with the symptoms and conditions favorable to its development.
The organic solution is corn meal at 20 pounds per 1,000 square feet.
I have a question for you pb, why do you have such a big bare spot?