I found some more detailed info on one website called Paul and Bernice Noll's Window on the World:
"Galls are modified plant tissue. This tissue is often highly elaborate, species-distinctive and host-specific. Most galls form when the invading organism causes hormonal changes in the plant, which stimulates rapid abnormal plant growth. These abnormal growths divert food away from normal tissues, weakening the plant. Moreover, the fast rate of growth may also crush normal tissues, cutting off sap flow or otherwise interfering with plant function. Galls serve as both a food source and shelters for these organisms. The galls found on our oak trees are cause by a cynipid wasp. Female cynipids lay their eggs in into actively growing meristematic tissue. The wasp larva uses the gall as shelter and feeds on the gall tissue. It pupates within the gall, and then the adult chews an exit hole to emerge. These galls do not cause major damage to the tree. The best way to gain control of this problem is to prune out the affected areas and destroy the galls."
There are so many different little homes all around us in nature. It's really kind of wild when you think about it. So, the next time you notice these oak galls lying around on the ground, stop and check one out. If you have kids, let them bring one home to study, or just to decorate your fall nature table. They really are quite beautiful with their shiny reddish brown spots and almost perfect roundness. It's amazing what a tiny little bug can do.