Most likely fall webworms. Moths, not pretty butterflies.

Some people cut off the branch end that's affected.

But you could disrupt the web so that birds and others can get to the caterpillars. A broomstick is a handy tool for doing that.

They won't affect your painted lady butterflies.

Ok thanks.

I wasn't worried about the moth caterpillars affecting the butterflies, I was wondering if the butterflies will lay lots of eggs in the local trees that will result in similar defoliating masses of butterfly caterpillars.

BTW, where do butterfly caterpillars nest? If I could find some, maybe I could let my kids raise them indoors.

No, butterflies don't do that.

Butterflies typically lay eggs one by one.

It's always best to rear them on the plant you found them. If indoors, it's best to feed them with leaves from the plant they were on.

If you can take pictures, you can almost always have any caterpillar identified in a flash right here in the gardenweb. Learning the identity of what you find munching away on your plants is key to your decision making process of whether to let them be or not.

Your description of the behavior of your pests is what led Jean to reasonably suggest that you have Fall webworms without seeing an image. Time of year, as well as the location of these webby nests were important clues.

Next, you need to learn about caterpillar host plants. Many moths and butterfly adults will only deposit their eggs on certain plants. Thus, identifying the PLANT becomes important.

There is nothing wrong whatsoever in sacrificing a host plant to support a caterpillar species. If you visit the Butterfly Forum, you will find a large community of people who plan and plant for that very reason. Many of the folks over there take it to the next step and collect caterpillars of favored butterflies and moths to rear in the safety of cages.

If you visit that forum, and I suggest that you do, be SURE to read up in the FAQ section first, as many of your questions will be answered there.

Butterfly caterpillars don't typically 'nest'. When they reach a predetermined size, they begin a occupation process which usually means the formation of a chrysalis. Moths make cocoons out of silk. The large 'nests' that you are witnessing are normal for a very few species...like tent caterpillars and webworms.

Neat thanks!

The Butterfly Forum quickly!

http://forums.gardenweb.com/forums/butterfly/

Here is a link that might be useful: B'fly Forum

While many people do that it is never necessary to cut off the end of a branch that is infested with the Tentworm or Fall webworm caterpillars, and some few people still talk about the very dangerous practice of burning these webs out of trees which should absolutely never be done. While the webs look ugly, and while repeated defoliating of trees over a number of years can be harmful to the tree, the only real problem these cause is they eat the leaves you could rake up to use in your garden as mulch.
Early on, like about the first 3 weeks, you can spray the tree leaves with Bacillus thurindeinsis - Kurstaki to control these, although later on more potent stuff may be needed such as Neem Oil or pyrethrins.

My tree has these nests every year. They kill the end of the branch there are on. But my biggest concern is that the leaves on the tree (I don't know what kind of tree it is - it has small fruits that I thought were apricots but the leave is long and narrow, not round like an apricot). The leaves each year get black spots all over them and the tree does not look healthy. I want to treat the tree and save it. Perhaps they are attacking it because it is weak from something else? Help!

Contrary to the misinformation some people have the Fall Webworms eating the leaves of trees do not kill the ends of the branches. Left alone those branches would leaf out again next spring. People that burn those webs out of the trees often find those branch ends are dead, because burning the webs does much more damage then the webworms. Cutting the branches off is the same thing. there simply is no need to do that, unless the tree needs some pruning and that happens to be a branch that needed to go.