Mushroom Spores can be found anywhere there are mushrooms, in particular, they are abundant within the Faron Woods. After slashing at a Mushroom, spores will fly out into the air. Link can use an Empty Bottle to swipe up the Mushroom Spores for later use. These spores are known to help cure birds.
The only known use for these Mushroom Spores is during a certain sidequest in which Link must use the spores to heal Orielle's bird, so that she can leave an island in the sky that she had crashed on. To accomplish this task, Link must obtain the Mushroom Spores inside of an Empty Bottle from Parrow. Link must than take these spores, and give them to Orielle so that she can use them in her Bird.