Darkwood

The mushroom granny is found in Episode 2, the swamp. When you find her, there will be a prompt to eat her. Choose it, and the achievement will unlock. It's not as cannibalistic as you might think, because she's a mushroom.

SPOILER
When you find the swamp cottage, talk to the woman inside and explore it, and you'll learn that one of the woman's sons went to gather mushrooms. The mushroom glade will be marked on your map. When you get there, look for points of interest labeled "Footprint." Depending on how you approach it, you may see a backpack on the ground where the first footprint is. Follow the footprints to the house where you'll find the mushroom granny. You can just start going nom nom nom right away, but to get the full mushroom granny experience, take a couple of bites first and then talk to her and show her items. Then finish eating her.