We write often in these pages about soil microorganisms. You will find it mentioned with nearly every fertilizer we manufacture. One of the most important of all the microorganisms are the beneficial fungi that work with the roots of plants. In the most simple terms these Mycorrhizal fungi attach themselves to the roots of plants. These fungi process nutrition from the soil which they give to the plant and the plant in turn feeds them carbon and carbohydrates. In this symbiotic relationship the fungus adds more surface area to the root system of the plant allowing it to take in more food and water.
The Crop and Soil Sciences Department at Penn State University offers a great summation of the process:
"Mycorrhiza refers to an association or symbiosis between plants and fungi that colonize the cortical tissue of roots during periods of active plant growth. The association is characterized by the movement of plant-produced carbon to the fungus and fungal-acquired nutrients to the plant
The term mycorrhiza, which literally means fungus-root, was first applied to fungus-tree associations described in 1885 by the German forest pathologist A.B. Frank. Since then we have learned that the vast majority of land plants form symbiotic associations with fungi: an estimated 95% of all plant species belong to genera that characteristically form mycorrhizae. The mycorrhizal condition is the rule among plants, not the exception.
The benefits afforded plants from mycorrhizal symbioses can be characterized either agronomically by increased growth and yield or ecologically by improved fitness (i.e., reproductive ability). In either case, the benefit accrues primarily because mycorrhizal fungi form a critical linkage between plant roots and the soil. Mycorrhizal fungi usually proliferate both in the root and in the soil. The soilborne or extramatrical hyphae take up nutrients from the soil solution and transport them to the root. By this mechanism, mycorrhizae increase the effective absorptive surface area of the plant. In nutrient-poor or moisture-deficient soils, nutrients taken up by the extramatrical hyphae can lead to improved plant growth and reproduction. As a result, mycorrhizal plants are often more competitive and better able to tolerate environmental stresses than are nonmycorrhizal plants."(read full article from their website here)
There are also some great articles on the web from Texas A&M and the New York Botannical Garden.