My rule of thumb tends to be at lower levels you'll want fungi. However, at higher levels, the regen on the fungi is pretty negligible to how hard you're getting hit and how much damage you're taking upon hit. At this point you'll want to be wearing higher AC/HP gear to mitigate total damage. Plus, you'll be increasing your total HP so you can take bigger hits that come all at once.
In low levels, the regen you're getting from a fungi is going to be higher than the damage the mobs are dealing you, so it makes sense to equip this instead of a high AC/HP breastplate.
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