phylum:      Arthropoda
class:       Insecta
order:       Lepidoptera
superfamily: Bombycoidea
family:      Lasiocampidae

Larvae of moths of Family Lasiocampidae, particularly Genus Malacosoma, these nasty, creepy little creatures are serious agricultural and forest pests, building huge silk tents in the forks of fruit trees and deciduous hardwoods and softwoods. Tons of them live inside these unsightly tents, sheltering at night and during the rain. During the day they swarm all over the outside of the tent, sunning themselves, crawling all over the tree, eating the leaves. Then they drop onto your head and down your neck when you walk under the tree. They are ugly, creepy, crawly hairy things with bright blue and yellow spots. They get everywhere and squish greenish-yellow under your feet. I hate them. They give me the goddam creeps.

Tent caterpillar infestations occur in waves every few years in forested areas of western and eastern North America, occurring in large enough numbers to defoliate whole trees and damage fruit. The best known species of tent-making caterpillar is the eastern tent caterpillar, Malacosoma americanum. Interestingly, not all Malacosoma build tents. M. disstria, notably, though a very destructive pest, migrating by the millions to new plants, does not build tents.

After mating in the fall, the adult moth, deposits several hundred eggs, covered by a thick, foamy brown crust, in bands around the twigs of the host tree. In early spring the eggs hatch and larvae from several egg masses congregate near a fork in a limb, forming the tent as they crawl around, leaving the tent silk behind.

About the only way to get rid of tent caterpillars is to soak the tents in kerosene or burn them (for real fun, do both). I remember my father and grandfather walking through the orchard with long flaming torches, setting the tents alight. When I was older, I myself would take the lopper and cut the offending branches, wrap them in newspaper and take them to the burn pile where I would set them on fire, watching them burn with vengeful satisfaction, knowing that I could never truly rest easy. They would be back next year.

Source for facts:
Source for irrational hysteria: my childhood