These are the caterpillars of the Walnut Moth caterpillar, Datana integerrima…(Note that this is not the huge, flashy bright colored Royal Walnut Moth that comes from an even more amazing caterpillar called the Hickory Horned Devil, which I will introduce you to later.) The ordinary walnut caterpillar comes from a small, very dull-colored and nondescript moth. When these furry monsters drop off the tree and pupate, they transform underground. I am thinking that the armadillos so many lawn- loving people dislike for making divots all over their yards may be my best ally here, because armadillos dig for grubs and such. 
My worst tent worm (yet another pest) outbreak on this tree was also when I had out a barrier of landscape fabric beneath the tree hoping to interfere in this pupating process. Instead, I think all I did was prevent the armadillos from digging a bunch of pupae up. There were more than ever the following season .

 Next year, it is war on these caterpillars, and the armadillos are going to have easy access. The tree is too tall for efficient spraying now; biological warfare with bacteria or fungal weapons may also be in order.

After munching on our pecan tree in spring, the walnut caterpillars all simultaneously made their way back down the trunk to shed their old skins. For some reason, they do this as a group; maybe the large furry mass of worms deters predation while they shed by looking like one large furry mammal. Your guess is as good as mine, but it is quite a sight.

— Artist Susan A. Walton