Yeah fungus, but also the sludge sometimes forms a crust on the top inch or so of whatever you dump it on, especially if you do it repeatedly or your water is super sludgy (like my turtle filter produces some crazy sludge). It can also end up with salt buildup, not necessarily sodium salt, but just any sort of residue that builds up and crystallizes. An occasional soak and rinse will clear all that stuff out, and leave you with reasonably clean coir once more.

As for the fungus, that’s super normal, but if you want to avoid it potentially being a problem, you can pick up some soil amendment that contains beneficial fungus (the sort that works with plant roots to increase nutrient and moisture absorption, rather than trying to consume the plant) to outcompete the nasty stuff you don’t want.