Kernel fuzz is not a disease and the brown material that is adhering to the kernel surface is not dangerous to eat. It only tastes dry and bitter. The fuzzy material on the kernel is actually part of the nut's inside shell packing material.
In a previous post, I presented photos of the nut filling process of 'Giles' pecan nuts. I explained how the expanding kernel compacts both the inner wall partition and the packing material that surrounds the kernel inside the shell. Fuzzy kernels occur when the kernels don't exert enough pressure on the packing material to compact it tightly together and against the shell. This occurs under two circumstances--not enough water or not long enough growing season.
Dry weather during kernel fill can inhibit full kernel development, causing poorly filled kernels. These poorly filled kernels are often covered in fuzz especially towards end of the kernel. The 'Giles' kernels pictured above are an excellent example of fuzzy kernels caused by drought.
Growing late-maturing cultivars in an area that doesn't provide enough summer heat also leads to fuzzy kernels. In this case, long-season pecan cultivars just run out of time to fill the kernel before the cool days of fall arrive. Kernel expansion ceases prematurely in response to cooler temperatures and shorter day length. The packing material isn't compressed fully and the result is fuzzy kernels. In Kansas, we find the southern cultivar, 'Stuart', and seedlings of 'Stuart' prone to fuzzy kernels.