You’d think they do the blow in from the inside, and the pattering of the holes doesn’t seem to support this. And the holes, if that is what they are, look to be too small. I don’t see any peeling of paint so I don’t understand the lack of preparation comment.
Preservation in Pink 
It looks like there may be recent cellulose insulation blown in through exterior clapboards, followed by spray paint without proper preparation.
I’m agreeing with Ann
But I’m wondering about the diamond pattern of the plugs below the window – did they hit a post or a brace and have to try again?
My coworker says termite work.
Answer: The paint is simply drying… That’s not very imaginative, huh? I’d love to hear what actually going on, though. I’ll be back:)
You’d think they do the blow in from the inside, and the pattering of the holes doesn’t seem to support this. And the holes, if that is what they are, look to be too small. I don’t see any peeling of paint so I don’t understand the lack of preparation comment.