Don't know what machine you are using. This pic looks like the nesting my longarm did because the bobbin spun too fast suddenly, causing back-lash. I just cut a piece of thin cotton fabric to fit in the casing before inserting the bobbin, and everything is now good. Don't know if it will work on a domestic machine though. Make sure your thread is going through the tension discs firmly first.

I have found that some threads don't feed off the spool smoothly. Using a cone thread holder even with regular spools can help. Just make sure the notch on the spool is on the bottom. Using leaders and enders, small pieces of fabric, can also help prevent the problem.

This happens to me on my Bernina occasionally when I have changed thread and the top thread hasn't be caught properly thru the tension section.

When I get that, I rethread both the bobbin and top thread, and it fixes the problem.

I figured out how to open my machine. I didn't see anything in the tension discs.

I did try changing out the needle for a heavier one and surprisingly that seems to have fixed the issue. It isn't what I would have expected but it seems to be helping.

Thank you all for your help!

I've had this happen when my needle needs replaced.

My daughter in law this last Christmas was having a similar problem with her machine. She had some coated thread that was the problem. Got her some cotton thread without coating and her problem was fixed. Good luck.

When that nesting happens it is because something is wrong with the upper threading, upper tension or needle.
Re thread with pressure foot up, make sure thread in tension disk first, if still happening change needle, if still a problem change upper thread tension, might take several tryies to get the right tension.
Sometimes it is even just a bad spool of thread, try using a different thread.

I had that problem all the time until I purchased the silicone washer-type items to put under the bobbin. Since then, no more birds nests.

I have had it happen to me. This is what I do
#1--Unthread the machine completly.
#2--Take out bobbin
#3--Brush out machine or vacuum any place for lint including under the plate
#4--Oil anywhere that takes oil
#5--Put in a new needle
#6--Re thread the machine

I have discovered that most of the time with me it needs a new needle or the machine is not threaded
properly. Going through all the steps never hurts the machine.
If you go through all of the steps and you still have the problem, take the machine in for service.