[Strengthened macromolecular creature growth], [accelerated reproduction], [strengthened toxic secretion], [algae mutualism]… Many augmenting components different from other species were added onto Light's fungal race. Then, as its tribe developed and grew stronger by devouring the anemone and reefs, it ejected spores as well, spreading their descendants to waft along the tides across the seas… as time passed slowly, Light completely replaced the coral life of an ocean sector as the dominant life of the seabed, while the wafting fungi that were coexisting with multifarious algae slowly grew a population in the sea.
It might be a bug or some issue the Joshua did not consider: The requirements to clear the First Phase of Continental War was for the player's cell to evolve into a complete creature. Not a simple multicellular organism, but a creature of another level with limbs like lobsters or crabs, and nothing but reaching that standard would count as clearing the level.