I'm not sure if it's mold or fungus or something else completely. But its just on the skin and the potatoes aren't soft and the inside looks normal. are they ok to eat or should they be tossed out??

It's a sure sign of rot. Other signs of rot are leaking clear-ish or opaque white liquid; and/or a black spot in the center.

I would toss them!

Definitely toss them... My airhead brother cooked some that looked like that once, and he ended up with one doozy of a stomachache for the rest of the night. I tried to tell him that anything that grows fuzz, whether it's soft or not, should be thrown.

The exception to that, or so my mom told me, is cheese because dairy farmers use mold to make cheese. But in my experience, it still tastes bad. I had a small chunk of colby/jack that was left after shredding for dinner and I was going to snack on some cheese & crackers. There was fuzz on one end, so I cut it off, and cut me a fuzz-free slice. UGH, it tasted horrible. You know how you can tell what something is going to taste like just from the smell? Well my cheese tasted like the fuzz smelled. I thought maybe I hadn't cut enough off, so I cut another good-sized chunk off and tried another piece of cheese. It was just as bad, so I threw that cheese away. And I make sure to use all my cheese within 5 days of opening it. I know it can last longer, but I do it just to be safe.

Throw them suckers out. The only time it's acceptable to eat a potato with something growing on it is when it has eyes growing. Better to be safe than sorry!!

Even though the insides LOOK fine, you'll probably find that they've got sort of a rubbery feeling.