You cut that thin velvety layer out of our shelf or horses-hoof fungus - the layer right below the hard outer shell and the "gills" in the center. It kind of looks like braintan leather. Lightly pounding it "fluffs" it up a bit more.
Then you prepare a strong solution of potassium nitrate dissolved in water. Just mix those "salt" crystals in until no more will dissolve in the water.
Then you soak your chunks of fungus in them. They will absorb that solution. Soak until the solution has soaked completely through the fungus layer. Then drain/dry your chunks of fungus. The potassium nitrate solution can be used several times until too much of the "salts" in it have been soaked out of it.
Once it is dry, it will catch a spark from flint/steel as-is. And once it has caught a spark, it will burn fairly hot and somewhat fast. It will burn kind of like the fuse on a firecracker, but not that fast. And it will be very hard to put back out, so only use a small chunk each time.
It will be somewhat similar to the match cord used on a matchlock musket. Those are cotton/linen cord that has been soaked in a potassium nitrate solution - with some other ingredients mixed in to control the speed of its burning/smoldering.
Amadou was made and used to make it a little easier to catch that initial spark. It generally works a little faster than charred punky wood (depending upon how good your charred punk is).
But amadou is also somewhat hydroscopic - it absorbs moisture from the air - just like black powder. So you need to protect and carry it more carefully.
In the end, charcloth is so much easier to make and use. The only problem with it is that it has not been documented before the mid 1800's. But amadou, charred punk, tinder fungus, and a few other things have been documented - written about in journals of the times.
Hope this helps explain it a little.
Mikey - that grumpy ol' German blacksmith out in the Hinterlands
p.s. Depending upon how much potassium nitrate your amadou/fungus has absorbed, it will spit out little sparks/pops as it burns. Something to watch out for.