I've seen many of these "fairy rings" but they come about from the way in which these fungi, (mushroom) grow out in a circular way, spreading wider each year as mushrooms are heavy feeders and they keep moving outwards to better nutrition, thus forming a circle. I suppose that's why mushrooms are often associated with the faery world.
Last year, on my front lawn, I had a fairy ring starting. Neighbours said I should get rid od that, as it will spread, and needs to be killed now.
I didn't kill it, as little known to them, I loved it, and this year, it is back again, with a ring of darker grass growing, and won't be long till the toad stalls come. I can dance in it, on a full Moon now, if I choose to do so LOL.
Whisker, I absolutely love your fairy picture, how pretty.
To me, I agree with the above posts, they do look mystical, and magical too.