Answer: What you're describing sounds like tent caterpillars. If you'll look around, you'll probably find them all over your neighborhood in alder trees, apple trees and cherry trees, too. Tent caterpillars seem to have taken over western Washington! This is the third year that my Seattle area garden has been attacked by these pests and they're really hard to control. The good news is that once the tent caterpillar population gets large enough, little parasitic wasps arrive to get things back in balance.
The caterpillars you've found in your tree are the larvae of a moth. The adult moth lays her eggs in a site that will provide food for her offspring (nice green leaves). The eggs hatch into little caterpillars and they spin webs to protect themselves from predators. The webbing is extended along the branch as the caterpillars feed on more and more foliage. When they're ready to pupate they leave the protective tent and spin a cocoon. In a few weeks they emerge from the cocoon, mate and lay eggs.
Tent caterpillars are difficult to control because insecticides usually do not penetrate their protective tents. One solution is to wear gloves and pull the nests out of your tree. But, because there may be many nests in tall trees throughout the neighborhood, you will only be getting rid of just a few of the pests and the adults from the other trees will lay eggs in your cherry tree again.
Tiny parasitic wasps will eventually visit your neighborhood in numbers large enough to kill off the tent caterpillars - for a few years, at least.
As for your cherry tree, it should recover from the attack. It's early enough in the season for it to develop new leaves once the caterpillars stop feeding. You can provide some measure of protection from another infestation next spring if you thoroughly spray your tree with dormant oil next January. Dormant oil is used on fruit trees to suffocate overwintering insect eggs, including those of the tent caterpillar.
Best wishes with your cherry tree!
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