Would anyone know what the dangling moss off this log is made from?

http://www.coolminiornot.com/65256

The long green stuff hanging down from the log looks like wet cotton soaked in PVA. The moss on the trunk could be Woodland Scenics Coarse Turf, put on and hardened with superglue. I have used this method before, and once hardened and painted, looks pretty much like you have there.

I wouldn't try and put the (thin Flash) superglue in the Coarse Turf once the figure has been painted though. The Superglue will "gas off' and leave white powder over everything.