Ever seen a lump or 2 like this on a squirrel?? It's a very common occurrence due to a natural parasite on squirrels called the tree squirrel bot fly (Cuterebra emasculator). With a little help from my backyard friends, I'll sum it up for you!
In a nutshell, the bot fly lays it's eggs somewhere in the squirrels environment....on a branch for example. When the squirrel passes by, they hatch rapidly and enter an opening on the squirrel or are ingested when they groom themselves.
After migrating through the body for about a week, they settle somewhere under the hide of the animal forming a warble...this lumpy pouch with a little hole at the end, where the larva will grow for about 3 weeks.
Once fully grown, the larva will back out of the warble hole, fall to the ground, burrow into the soil, then hibernate until the next summer when it will emerge as an adult fly and start the cycle all over again.
The warble then heals up pretty quickly and the squirrel is soon back to normal. Pretty gross to see, but a normal relationship between host and parasite that is more of an inconvenience to the squirrel than anything.
You can check out this website for a more in depth look at the squirrel bot fly if you really want to be grossed out some more! LOL