Caterpillars are as different as from each other as their adult forms are different from other adult forms. Some can be smooth and naked, others have dense hairy coats of many different colors. Still others have spines or long whiskers. The caterpillars are also vulernable to predation by birds and other animals, which is why many of them have hairs, spines, or other defense mechanisms. The caterpillar will shed its skin, or molt, as it grows, to accommodate the larger size, much like a snake sheds its skin as it grows.
Most caterpillars molt four or five times before they are full-grown.
The photo is of a monarch caterpillar, on a milkweed leaf. The next stage in the life of a butterfly is the pupae stage. After the caterpillar sheds its skin for the last time, its skin will begin to harden. It has no eyes, antennae, mouth, wings, or legs. This form is called the pupa, and it can hardly move except for to wiggle its abdomen slightly.