Hello, the bark has been sloughing for some time, as those critters under the bark are pillbugs, not an insect though, but a crustacean.  Those accumulate in protected spaces and in litter.  So they don't harm the tree at all.  The white mold looks like it is there because water got under the loosening bark.  Pillbugs like a little water too.

I can't see why the bark is being sloughed, but as long as there is still some outer bark protecting the inner bark, the tree should be ok.  Is the tree healthy looking?   Douglas-fir has thick bark and can slough, but this seems a little excessive.

Keep an eye on the tree crown to see if stays healthy and green looking.  If the inner bark/wood of the tree is not exposed by the bark sloughing I'm not sure you should worry too much.  If the crown looks off color or thin, or if there is exposed wood, you might have an arborist visit the tree and determine its safety.

Thank you for the response on the tree. I am glad to learn that we are housing another interesting species in our yard! We love our trees and will keep an eye on it. The sloughing was odd and only on the bottom of the tree. That wood was dry and crumbly.