I've used (some kind of) dried decorative stuff from JoAnne's fabric that does a half-decent job of resembling shrubs and bushes, and have made some trees with it too. Forget what its called; got it about 2 years ago. Over time (and especially in winter) it tends to dry out somewhat and become more brittle, What I've kept in a sealed baggie is still like new. It is also not all uniform in color, which makes it more realistic. I model in n-scale, and finding appropriate stuff like this is difficult, since what works for a lot of HO'ers is a little out of scale in n-scale.
Probably is lichen. The rule is, if it looks good, it is good. Variety is important. It probably looks like something. Mixed with other scenic materials it will add something. Learning to mix and match is an aquired talent. Expermentation is more useful than instruction. Try some, see what it adds.
While shopping at our local Home and Garden store I came across Decorative Moss. It came in a variety of colors and it looked like lychen. Then I was wondering about the scale size of some of the pieces and thought that it would be too big for HO gauge. Has anyone used this for ground cover and if so what was the outcome.