The bark damage is probably sunburn. I say that because it is on top of a large horizontal limb. Perhaps someone did some pruning in that area and exposed the limb to excess sun. Painting such limbs and the trunk with a 50:50 mix of white interior latex paint and water will help from having this elsewhere. It probably won't help the current limb much but won't hurt either. The hole is where a limb died and rotted out. Trim any dead limbs back to the collar. The collar is a ring of raised tissue at the junction of a limb and a larger limb. In other words don't leave a stub but don't cut a wound any bigger than necessary when pruning out a limb.

You have quite the colorful garden growing on your apple tree! The bright green in the second picture and probably the dark green with little russet fruiting bodies in the first appear to be moss. The rest--pale green, dull light green, yellow-green, orange-gold, as well as the dusty white splotches, appear to be a variety of lichens. Lichens are associations of two or three distinct organisms (fungus, algae, and sometimes cyanobacteria) living in varying degrees of cooperation. They come in many sizes, shapes and colors. In general neither lichens nor mosses are thought to threaten the health of trees on which they live. I also live in northern California, at about 1500 feet in the Sierra foothills. Our area is sprinkled with black oak and several varieties of scrub and live oak. When cold weather comes and humidity rises, mosses and lichens suddenly become visible on all these trees. The more moisture we get, the more noticeable (and colorful!) the lichens become. Toward the end of a really wet season, the things are literally hanging off of the branches, like Spanish moss in the South. The one I marvel at most has long curly tendrils of bright glowing chartreuse. When the season changes again and things begin to dry, so do the lichens. Their seasonal extensions break, blow off, or dry up, and all but disappear--until the next rainy season. The oak trees never seem to mind. It's dark out right now, so I don't know whether or not we have lichens on our apple tree, but I wouldn't be surprised or worried if I saw them there. Scraping them off could very well injure a tree, allowing entry to a number of truly harmful organisms. The URL below may help allay your concerns. If you are still worried, you could call your local agricultural extension and make an inquiry. Sweetcicely Here is a link that might be useful: Lichen information

You have beetle damage. The tree will probably die. We have the emerald ash bore here in Michigan that's raising havoc. It Looks very similar to your tree. This also means you might have more trees infected too. You can see where the lines are is where they chewed tunnels behind the bark eating the sap wood till the area dried up and the bark fell off.

Thank you for all the wonderful answers, I hadn't even considered grafting as an option! I don't have extensive experience but I am certainly willing to try, no harm done if it fails at this point. I have a crabapple on the property as well that escaped more severe damage (but still had a nibble or two taken out of it!) so I will try spring grafting there and wait for new shoots to emerge from the existing rootstock. I've already made a trip to the home improvement store and am prepared to ramp up my defenses around the trees! I'm also planning a vegetable garden this spring so I guess it's good to know rabbits can get through the existing fence and do damage there as well. As a side note, I just realized my username is particularly appropriate in this scenario as I declare war on the wild bunny population ;) Although I'm sure my pet rabbits will appreciate the apple wood feast they're about to get, so maybe they're in cahoots....