The part labeled III in the diagram is Hyphae. Hyphae are thread-like structures that form the main body of a fungus. They grow in a network called mycelium, which is made up of many hyphae. Hyphae are responsible for absorbing nutrients and water from the environment and transporting them to the rest of the fungus. They also play a role in the reproduction of the fungus by producing spores. Hyphae can vary in size and shape, but they are typically very thin and can grow very long, allowing the fungus to spread over a large area.