Only records from Europe and Asia of Marasmius limosus are considered as the few geographically distant records from America may belong to a different taxon.(Antonin & Noordeloos (2010).

Marasmius limosus is a characteristic small fungus growing saprotrophically on debris in alkaline fens and along stream and lake shores. It is predominately a European species and distributed from the nemoral to the boreal zone. It is easily identifiable, but very small and certainly overlooked. Nevertheless, it is obviously very rare throughout its range.

M. limosus is sensitive to changes in the hydrology. During the last 50 years, the potential wetland habitats of M. limosus have declined and deteriorated significantly in Europe. However, being a saprotrophic litter fungus, its population trend is assessed over 20 years. Furthermore, the present population is estimated to occur at more than 500 sites and exceed 20,000 mature individuals. Although M. limosus is nationally listed as Near Threatened in a few countries, the overall global assessment instead is for Least Concern (LC).

The species has its main distribution in Europe, being reported from France, Switzerland, Austria, Slovakia and Ukraine in the south to UK in the west, Fennoscandia in the north and Russia in the east. It is also reported from a few places in Siberia (Asia) (GBIF 2024).

Marasmius limosus is a widespread but rare species in Europe. It is recorded from over 20 countries with about 700 records reported in GBIF (2024). It is generally not listed in national Red Lists, except in a few countries, e.g. Austria (Dämon and Krisai-Greilhuber 2017) and Switzerland (Senn-Irlet et al. 2007). Assuming M. limosus' population size corresponds to its potential habitat, the overall population may have declined during the last 50-70 years due to declines in, and deterioration of, fens throughout Europe (Šefferová Stanová et al. 2008). However, the contemporary rates of decline are not believed to be great enough to approach the thresholds for consideration as threatened. Although rare, the total number of sites is assessed to be in the range of 5,000 corresponding to significantly more than 20,000 mature individuals (cf. Dahlberg and Mueller 2011) once the number of functional individuals per site are taken into account.

Marasmius limosus inhabits various types of sedge swamps and reed beds (Phragmites), sedge meadows, fens, stream- and sea shores including beech forest. The habitat corresponds to alkaline fens which is a Natura 2000 habitat. The fruiting bodies grow on dead stalks and leaves of monocotyledons (Carex, Phragmites, Deschampsia). Antonin and Noordeloos (2010), describes M. limosus' very tiny fruiting bodies to occur on detritus of Cyperaceae, Poaceae and Typhaceae in wet sites (alkaline fens, wetlands, springs, marshes, marshy forests). Known substrates are Baldingera arundinacea, Brachypodium sylvaticum, Carex spp., Molinia coerulea, Phragmites australis and Scirpus sylvestris. It is a typical fungus for the plant associations Caricetum acutae and Calamagrostidetum arundinaceae in Ukraine. It always grows in the lowest vegetation layer under moist conditions.

The habitats of Marasmius limosus are sensitive to hydrology changes e.g. caused by peat and moss extraction, drainage ditch digging and removal of reed belts. In the past, alkaline fens have been selectively drained, become very rare in most of EU countries and have a high conservation priority (Šefferová Stanová et al. 2008). For example, in Estonia the main trends in the distribution of communities of Caricetum davallianae over the last 35-40 years were evaluated and they were found to have decreased by more than 50% (Šefferová Stanová et al. 2008). In the United Kingdom, it is estimated that 95-98 % of species-rich fens existing in 1940 have been lost. Similar losses have been reported in France and the Netherlands (Šefferová Stanová et al. 2008). Drainage schemes were particularly successful in the lowlands, where the majority of fens have been drained and transformed into agricultural land with limited potential for restoration. In a recent nation-wide inventory in Sweden, disturbed hydrology was reported on two thirds of the almost 1,600 alkaline fen sites with high nature conservation values identified, although for some of the sites the disturbance was marginal (Šefferová Stanová et al. 2008). It is concluded that majority of fens have been damaged and often changed into low productive meadows that cannot be maintained without management. Besides being sensitive to changes in hydrology, these ecosystems are are also very sensitive to hydrochemistry in the wider area.

No use or trade is known for this tiny species.

Conservation management should focus on maintaining the appropriate hydrology of sites with known occurrences of Marasmius limosus. Site protection may also sometimes be appropriate. However, most critical is to maintain appropriate hydrological regimes to prevent changing water conditions (e.g. drying). Also, eutrophication and changing of water composition should be avoided.

Monitoring of this species and its habitats is desirable. Clarification of the taxonomical status of the few North American records would be helpful.