The fungus itself is very specialised. It does not normally produce fruiting bodies (the typical mushrooms and toadstools that are seen above ground), but reproduces clonally (ie. by budding off new bits of fungus that are clones of the original fungus). New fungus-growing ant queens take some of the fungus from the nest in which they were reared with them when they leave the nest, and if they are successful in mating and founding a new nest, they use this to start the new fungus garden. This means that the fungus in the new nest is genetically identical to the fungus in the nest in which the queen was reared.
The fungus garden is an efficient factory for turning indigestible material into food that can be used by the ant colony. Plant material and dead insects cannot be digested directly by the ants, but the fungus has enzymes which allow it to break down these materials into a form that it can use for its own growth. Some of this growth goes into special nutritional bodies called gongylidia, which are eaten by the ant larvae and also sometimes by adult ants. The ants can digest the gongylidia relatively easily, and so use them for their own growth and development.
It has recently been shown by Ulrich Mueller and co-workers (Mueller et al. 1998) that the fungus-growing ants have "domesticated" fungi several different times during their evolution. The higher attines use one group of fungi, while the lower attines use a different more heterogenous group of fungi. The picture above shows a fungus garden of Apterostigma collare.