Fungi and unknown Caterpillar

In Glengarriff Woods we spotted this Wart-like structure around a Birch tree, recently.
Does the tree protect itself this way, when, say, a branch has broken off? A friend said he'd seen it before, again on a Birch. And perhaps on a Maple too?
Can anyone tell me what it is?


Also spotted were these two species of Fungi;
no. 1
No. 1. very pale brownish cap
And specie, no. 2:
No.2 brown & greenish cap.

And this Caterpillar; I have seen it before somewhere with a name attached. The latter has now eluded me. A common specie, no doubt. Any comments would be very helpful.