On the pic, the wide grey and smooth area around the hole is the clue of an old limb lost a long time ago. It's the new bark and new wood which the tree grew over the wound. On its sides and over it, there's the darker bark ridge typically generated by the growth in the fork. It can stay as a remnent on the bark's surface a very long time. The hole itself is way too round to be the last bit of the sealed wound and the rougthness of its edge doesn't match with the edge of a callus nor the pattern of the smooth bark around. I'd say that the cavity is or / had been used as an habitat and the criter(s) maintained their access by continuously shewing the "door frame".
The wood pecker often starts first to get some food in the wood, usually a conical hole and if he found the wood suficently weakened by the fungi, he can dig it to carve his nest (he 's not mad, he wouldn't excavate a sound wood). For the tree, the dammage was already in its way no matter an actual cavity or plain punky wood. You find the fungi digesting the wood all around the cavity, sides, top and bottom (excepted where the tree had been able to put a good fence in the living part of its wood). Almost nothing can stop the fungal invaders in the heart wood. Additionaly, they prepare the "ground" for the insects borers or is helped by the some other borers to conquier new territories. The cavity is just optional. Though, it can appear too without the help of the wood peacker when too much dammage is done to the wood. Many other criters apreciate the opportunity to nest.
Also the argument can be made that as a tree goes from a rod to a cylinder as it decays making it stronger, to a point.
No no, a tube is never stronger than a rod with the same diameter
. The tube just lacks of all the material inside to make the rod. Like, the rod can be seen as a whole bunch of concentric tubes all welded together. How can just one of these tubes be stronger than the whole?
If they weight
the same, yes, as the tube has a bigger diameter for the same quantity of material.
But in the case of the hollowed tree, we are in the first case.