I’m not a big fan of insects, specially not caterpillars. I’ll avoid any if I come across them, but if I ever encountered one likes this, I think I would take a closer look at least. This is the Big Headed Caterpillar, found in Australia, Papua New Guinea, and the Solomon Islands. It is currently considered endangered, mostly due to habitat loss.
What you see in the photo is this caterpillar’s defense mechanism. The caterpillar folds itself to reveal a fake head that resembles a skull with teeth, to help scare off predators.
This caterpillar eventually turns into a moth that doesn’t quite look as pleasing (Do they ever?).
When the caterpillar feels threatened, it rears its anterior body segments, and bends between the first and second abdominal segments. The caterpillar simultaneously curls its real head as well as its true legs underneath the raised portion of its body. By curling in its head and body this way, the caterpillar stretches the skin on its dorsal side and reveals the previously-concealed eyespots. These large eyespots are composed of black pupil surrounded by a blue, then yellow ring. Between and below the eyespots are white markings, often described as looking like teeth, and indeed resemble the teeth from a cartoon skeleton.