Itching to know?!

I spotted this large nest in a tree near our picnic table.

The webbed bag was about the size of a large rockmelon and seemed to be stuffed with dirt. 

I wasn't sure what it was but fortunately didn't investigate too closely. It's a caterpillar nest - and they're not very nice caterpillars! The horrid inhabitants are known as itchy grubs and I recall having a run-in with them when I was a kid living at Yowah. I was itchy for ages and required many carb-soda baths to ease the irritation.

More formally, the grubs are known as processionary caterpillars.  They are the larvae of the Bag Shelter Moth (so called because of the web nest made by it's offspring).  Large groups of caterpillars rest within the webbed nest.  When they leave the shelter to find food, they do so in long lines.  You can read more about them here.