The song most aptly describes the Medusoid Mycelium, a lethal species of fungi that spreads through the air and can kill within the hour.
The song also seems to be telling a story, of "marchers" (of an army, likely) being driven insane by the mushrooms they march through. As "more marchers marching heavy-heeled" continue on, they continue the spread of the spores, continuing the death ahead of them.
Likely, this makes a metaphor for the horrors of war- "over long-bewildered farms[...] where once was rice" paints the picture of a devastated countryside, with life destroyed. As the story details death brought by marchers, it is not a far leap to assume it is describing the devastation brought by war.
This interpretation could also imply a metaphor for VFD during the events of the series; both sides send their agents, including young children, on possibly fatal missions in an effort to obtain the Sugar Bowl, which does not matter in the long run- their war destroys the lives of the children, much as Count Olaf implied upon reciting This Be The Verse.[1]