I ocassionally have those in my pecan trees and when I called the ext. they told me they were annoyance" and aesthetics factors but not damaging to trees. Besides, they're so high up you really can't spray for them, in my case. In 15 yrs they haven't killed a tree yet.
We call them bag worms here in the Midwest and yes they make their way up to high areas in the trees , too high to reach. It does look unsightly and can gt out of control. In the early spring with the help of the spring winds the bag usually falls to the ground . This is before the hatch out of the worms. At that time the entire bag can be picked up and burned along with the other winter garden waste. This breaks the cycle. I have seen large groups of worms on the trunk of a tree. I'm not sure if they cycle into moths and then continue the egg to larve to moth process.
I didn't wait but got rid of the worms on the trunk with the help of a spray insecticide. I would be interested in seeing what the worms hatch into.