This is wild! After a large rain I found similar droppings on the ground by my largest tree but have never seen caterpillars in it. It is crazy to think that they are pollinators and composters!
I thought so too, your last sentence is the beauty of my discovery!! Naturebis amazing, its doing 3 things, helping the tree shed and grow fresh leaves, a great pollinator and their poop becomes plant food, or tree food in the forest.