It has a tetrapolar mating system with each cell containing two genetic loci (called A and B) that govern different aspects of the mating process, leading to 4 possible phenotypes after cell fusion. Each locus codes for a mating type (a or b) and each type is multi-allelic: the A locus has 9 alleles for the a type and an estimated 32 for its b type, and the B locus has 9 alleles each for both its a and b types. When combined this gives an estimated 23,328 potential mating type specificities. While all mating types can initially fuse with any other mating type, a fertile fruitbody and subsequent spores will result only if both the A and B loci of the merging cells are compatible. If neither the A nor B are compatible the result is normal monokarytic mycelium, and if only one of A or B are compatible, the result is either two mycelia growing in opposite directions (only A compatible) or a "flat" phenotype with no mycelia (only B compatible).
Correct, the downside is lots of nonviable offspring. I would guess the fungus needs to be able to colonize widely without sexual reproduction as well in order to take advantage of that rapid adaptation.
Fascinating, I feel like I just caught a good glimpse of how fungus paved the way for the rest of life on Earth - wherever plant and animal life arrive, the fungus got there first.