The worm itself lives inside the tube.

There Is A Christmas Tree Worm

Scientists discovered this oddity that lives in Australia’s Great Barrier Reef. Christmas tree enthusiasts may be dismayed to see that the Christmas tree worm’s “branches” are blue and look more like a fake plastic Christmas tree. Nevertheless, the points at the end of each bristle look like they could be Christmas tree lights.

The whole “tree” isn’t the worm; the worm itself lives inside the vertical tube that resembles the Christmas tree trunk. It can recoil its “branches” at will, probably as a defensive mechanism to protect itself from its enemies.