This guy is the Daniel Day-Lewis of pretending to be poo.
See those things dangling off the end of it there? Those are discarded heads. Its own heads, to be precise. This caterpillar actually retains its old head capsules from previous molts and keeps them around, attached to the body by long white hairs like some sort of nightmare dingleberry.
Nightmare Dingleberry would be a great band name for guys with no intention of getting laid, ever.
This literal headdress assists the caterpillar with passive camouflage, but in a pinch it uses them defensively as well. Whenever the three-spot caterpillar feels threatened, it'll start violently thrashing around, causing the heads to rattle and bounce intimidatingly. It's even thought that the heads can be used to bludgeon an assailant into submission should it get close enough. You don't know PTSD until a living shit whips you with a flail made out of decapitated heads.