1/20/2011 Bill Stone Galls on Valley Oak. Caused by small wasps that sting and lay eggs on the oak which causes the oak to isolate the sting with the formation of the gall. Wasp young are very protected and when mature exit by digging out, hence the holes you see. Sizes range form marble to apple. see http://www.redding.com/news/2007/sep/08/natures-oddballs-oak-tree-galls-are-strangely-intr/
for more info
natureplantinsectgallwaspvalley oak. californiawalnut creek
Interesting shot, is this like a nest??