A fungo bat is used by the coach to hit ground balls or fly balls to his team. All throughout high school and college many players use fungo bats to play fungo golf. This is when each person has a fungo bat and a baseball and they pick out targets around their field or complex and basically play it in the same manner as golf. Fungo bats should not be used to hit a pitched baseball because they are much weaker than normal bats and will break much much easier.
The fungo is used by a coach to hit balls for defense practice. It is lighter weight, so less fatiguing to hit ball after ball. The fungo sheds its weight above the hands. The severely tapered barrel to drops weight and maintains a high moment of inertia. While the bat would be at greater risk of breaking if used in a live batting exercise, it is safe to use in practice because there are much fewer mis-hits.
First base fungo hits fly balls to center field (helps here if both fungo hitters move up and apart, hitting from about the front of the mound extended towards the bases). Center throws to second, second baseman is cutoff (for us it was, anyways - change to suit your style). Third base fungo hits balls to left field, who throw to third, with a second shortstop as cutoff (but you really don't need one, if you're shorthanded).
Next, the third base fungo hits to left, who come home, third baseman cuts (again, 60' from home, about the pitchers mound). First base fungo hits to right, who throw again to second (this is where we practised cutting off doubles on balls hit into the right field corner - it's really practiseing hitting your cutoff man quickly than anything else - also the reason it's safe to do while left field goes home).
The main goal of the game is to hit it to the pin in the least amount of strokes, similar to golf. Holes can consist of a certain sign in the outfield, in the tarp tunnel, off of the foul pole, onto the pitchers mound or off of a yardage marker on the outfield wall; it can really be anything on the field that can be hit without breaking. There can even be 2 part holes such as: First you have to hit the ball off of the scoreboard, then you have to hit the ball off of the right field foul pole.