Does anyone know why a tree gets knots in it?

Here's a picture of the tree in question.

http://i19.tinypic.com/4cw3dl5.jpg

If anyone finds resources that would be great, too!

Sorry about the size of the picture!

During the development of a tree, the lower limbs often die, but may persist for a time, sometimes years. Subsequent layers of growth of the attaching stem are no longer intimately joined with the dead limb, but are grown around it. Hence, dead branches produce knots which are not attached, and likely to drop out after the tree has been sawn into boards. In grading lumber and structural timber, knots are classified according to their form, size, soundness, and the firmness with which they are held in place. This firmness is affected by, among other factors, the length of time for which the branch was dead while the attaching stem continued to grow.

Think that's not a knot though --it looks like a burl -- burls produce some fantastically figured wood.

Hmm Burls... Wood burls are large, rounded outgrowths on the trunk or branch of a tree. It is thought that irritants such as bacteria are the cause of wood burls. A curiosity of nature, wood burls are often used decoratively as a veneer in woodcraft. Wood burls are sometimes hollowed out and turned into artistic bowls.

I think I'll lean toward the burls. The picture only shows a fraction of the amount of bumps on the tree.

Thanks everyone!