Downy Woodpeckers nest in tree cavities they make themselves or come across. I have not witnessed them bringing any additional nesting materials into the nesting cavity which leads me to believe that they just used wood chips that they have generated as they build the cavity. How do you know that a Downy isn't just foraging for food? Well, I can't imagine why a little Downy would exert so much energy into one spot. They normally just scavenge the bark of trees and only go into the wood a little ways to find beetles and other insects. Also, this cavity goes in and then down which isn't your normal woodpeckers foraging behavior. When I first spotted the Woodpecker (who was right outside my window) all I could see were his tail feathers and abdomen sticking out. His tail feathers were going slightly up and down which led me to believe that he was doing what a woodpecker does, peck wood. That's when he came out with a gob of fine wood chips in his mouth, he looked around and then shook his head, releasing the chips. The entrance hole was just barely big enough for him to fit (they both have to wiggle to get themselves out.) He continued doing this for several days, his mate would come by every now and then to relive him from duty. Taking turns, they got the job done in about six or seven days. I had put a specialized seed mix in my tube feeder that contained "Energy Chips." These peanut shaped "chips" contained calcium to promote egg development. It was really a treat when I saw the female Downy come to my feeder take a chip and eat half of it. I witnessed the two of them mating several times and after that I came to the conclusion that the eggs were layed. They would switch places once in a while and they became quite secretive. Now the eggs have evidently hatched because the parents are going in and out with gobs of suet and other things on their way in and nothing on their way out. I can't wait to see the young flying around!

The Downy woodpecker has the same coloration as the Hairy Woodpecker, really the only way you can tell apart is by size and beak length. The Downy is about half as big as a Hairy and has a stubby beak where as the Hairy has a long, bulky beak.