So what is happening here. The caterpillars live on acacia an other trees in large groups within clumps of webbing. When the caterpillars are mature, they leave the host tree and follow-the-leader to an area of soft, pliant soil where they bury themselves and form cocoons. After a period of time, the adult moths will emerge.
The adult, a moth Ochrogaster lunifer, family Notodontidae, subfamily Thaumetopoeinae. At this writing, the moths are not uncommon around lights after dark.
A WORD OF CAUTION
The fine hairs on the caterpillars are to be avoided. They are urticating can cause serious skin irritation and if there are accumulations of webbing, cast skins at the base of the host trees, these can provoke allergies in humans.
Dogs can come to grief by physically encountering the caterpillars. Should they step on the line or sniff the caterpillars, the hairs can become embedded in their paws or tongue when they lick the source of irritation. If the hairs remain embedded, and they often do, they can cause infection which in extreme cases can result in the tongue becoming necrotic and leading to amputation.