Spalted wood is definitely caused by water, relative humidity and fungus. You can make a lot of things from spalted wood if fungus hasn’t completely rotted the wood.
If you catch spalted wood in time, making something may halt the fungus growth. Not sure if fungus dies or not. Would think if left unfinished and given right condition fungus would start growing again and completely rot the wood.
Would not be comfortable using spalted wood around food items. If finish is compromised, your back to wood with a fungus waiting for right conditions to start growing again.
Have turned many items using spalted wood, mainly dust collectors. Also made several pens using spalted wood, and finished with either Deft, or Hut Crystal Coat (shellac), and either Hut PPP combo sticks or Johnson wax over that. One of those oops button click pens finished with crystal coat & PPP, now devoid of almost all finish, is my desktop pen for taking notes.