A dead tree is not dead. There is life in it and on it and all through it. Thousands upon thousands of insects may dwell in a single downed tree. Many kinds of fungi may inhabit it. This mushroom is only the external evidence of a fungus that is shot through the pores and crevasses of this fallen tree. The mushroom is the 'fruiting body' of this life form. It is to the entire fungus what the tiny crab apple is to the entire crab apple tree. The fungus lives hidden entirely within the dead wood for years, decomposing it, softening its fibers so that eventually it returns to the ground to become part of the soil. Typically it appears as strands or sheets of white or tan within the trunk and under the bark. At certain times of the year, when the moisture conditions are just right, a mushroom might appear on the surface and mature to form spores within the fins on the bottom surface of the cap. From those fins, the spores are dispersed to float about on the wind to form new fungi on some other fallen or dead tree.