Max Mushrooms are the hot new item Pokémon Sword and Shield's Isle of Armor DLC expansion pack. Along with these beauties, you can use them to unlock additional Gigantamax Forms for certain Pokémon on your roster by creating Max Soup. You unlock access to Max Soup by completing the second try in the Isle of Armor story mode. You can return to the kitchen to speak with the Dojo trainer who will make you Max Soup, but you need three Max Mushrooms.
After you receive your first group of Max Mushrooms, you need to work on collecting more. The only way we've figured out how to do this so far is to complete the Max Raid Lairs available on the Isle of Armor. When you complete a max raid battle, you will need to walk around the area to locate Max Mushrooms. You can find them in the caves and forests of the island.
The Max mushrooms will look a bit like the ones you discovered on the second try, but they are slightly smaller. Either way, they're not a sparkling dot or a PokéBall on the ground. Max mushrooms are a mushroom that you can interact with when you get close to them.
Once you collect these Max Mushrooms, you will need to do another Raid Battle for the chance that another Mushroom set spawns somewhere on the island. It is an ongoing process and includes many repetitive processes that you will have to repeat over and over again. To receive more Max Raid Battles, you must complete them all to respawn another set on the Isle of Armor, just like in the traditional Savage Sword and Shield area on the Galar Continent.
You can return to the Master Dojo whenever you have enough Max Mushrooms to unlock the Gigantamax form of another eligible Pokémon.