Zanaris Fairy Ring (south-west of the bank). Fairy ring codes cannot be entered into the entrance/exit fairy ring, nor can they be entered into fairy rings around RuneScape; all rings redirect the player to Zanaris, where the code can be entered.

yes you can eat fairy ring mushrooms because they are nonpoisen mushrooms

It is okay to eat out of a fairy ring - just don't eat while in a fairy ring of the fey folk will take this as willful involvement in their revelry and will hold you as a 'entertained captive' for possibly years and years.

By starting the "Fairy Tales Pt. 2" quest

absolutly nothing