Given the purportedly divine origins of the Japanese imperial court (and the similarly mythical-sounding origin story of the imperial regalia found in 11.12 of Heike), it seems very on brand for a giant demon spider to be the first court rebel.

Heike and other monogatari are also filled with stories of supernatural events, and ghosts, demons, and other nature spirits generally play a prominent role in Japanese mythology and folklore. Shinto and Buddhism both allowed considerable room for such beliefs to flourish as well (the former being the source of many of them), so with all these elements in play, it seems quite reasonable that most folks would have believed stories like this one.

That being said, there is some debate on whether the demon spider application of Tsuchigumo came first, or its use for referring to indigenous (i. e., not Yamato) peoples of northern Honshu. It's impossible to know for sure with our current source material, but the demon spider story could certainly have originated with the Yamato court putting down some indigenous tribes rebelling against its rule, morphing over time into the more exotic tale of spider extermination we get in Heike. Whatever its origin, it doesn't seem to have been out of place among other stories about eight-headed serpents and giants living in the islands south of Japan.

(Part 1 of 2)

Thank you for asking this question. I didn’t think I could answer it but it sucked me into a strange and marvelous world of supernatural creatures and mythology. And along the way, I found answers. This post is going to be long and complicated.

In her article on a thirteenth century picture scroll about an evil earth spider, Noriko T. Reider sums up the history of the word:

What is tsuchigumo? Mark Hudson considers the tsuchigumo “as an example of the Yamato language of political allegiance, whereby people who opposed the state were assigned the status of barbarian” (Hudson 1999, 201). It is commonly accepted among scholars that tsuchigumo re (Hudson 1999, 201).5 It is commonly accepted among scholars that tsuchigumo refers to the less-cultivated indigenous people of Japan who inhabited the islands after their creation by Heavenly deities but before the arrival of the Imperial family’s ancestors, who claimed authority to rule Japan and these indigenous people as descendants from Heavenly beings. The term tsuchigumo is used derogatorily in ancient Japanese literature to refer to those who defied Imperial (central) authority (Tsuda 1963, 188–95). For instance, in Kojiki 古事記 (712) (Ancient matters; Philippi 1969), on his eastward expedition to claim his heavenly authority, Emperor Jinmu 神武天皇 and his men smite a great number of indigenous pit-dwelling tribesmen described as earth spiders (Kurano and Takeda 1958, 157; Philippi 1969, 174–75). An overwhelming majority of earth spiders had fought and been eliminated in bloody battles, though a few survived by apologizing profusely for their resistance toward imperial authority and escaped capital punishment. As for the origin of the name, Urabe Kanekata 卜部兼方, a Shinto priest of the thirteenth century, writes in his Shaku Nihongi 釈日本紀 (Annotated edition of Nihongi or Nihon shoki), “According to Settsu Fudoki 摂津風土記 (Topography of Settu province), in the reign of Emperor Jinmu, there was a villain called tsuchigumo—he was given the contemptuous name of “earth spider” because this person always dwelled in a pit” (Urabe 1965, 132). Aston also writes, The “short-bodies,” etc., of the “Nihongi” description I take to be nothing more than a product of the popular imagination working on the hint contained in the name Tsuchi-gumo, which is literally “earth spider”… [I]n one of the passages above referred to, the Tsuchi-gumo are described as inhabiting a rock-cave, but in others they are said to live in muro or pit-dwellings, and this is obviously the origin of the name. (Aston 1956, 129) A tsuchigumo is thus depicted in ancient literature as a villainous human being whose living customs differ from mainstream conventions.

-(p. 59, “Tsuchigumo soshi: The Emergence of a Shape-Shifting Killer Female Spider” in (Asian Ethnology*; Nagoya Vol. 72, Iss. 1, (2013): 55-83.)

Folklorists of more modern times often try to find traces of real historical events in ancient texts and folklore. Very often the evidence for this is scanty. But the interesting thing about the “tsuchigumo” is that the original ancient texts featuring them are less fantastic than the later ones. Here is the ancient Nihon Shoki’s version of Jinmu’s clash with the earth-spiders , as translated by Basil Hall Chamberlain. (A new translation might be better, but it’ll serve our purposes.)

When [His Augustness Kamu-yamato-ihare-biko] made his progress, and reached the great cave of Osaka, earth-spiders with tails, [namely] eighty bravoes, were in the cave awaiting him. So then the august son of the Heavenly Deity commanded that a banquet be bestowed on the eighty bravoes. Thereupon he set eighty butlers, one for each of the eighty bravoes, and girded each of them with a sword, and instructed the butlers, saying: "When ye hear me sing, cut [them down] simultaneously." So the Song by which he made clear to them to set about smiting the earth-spiders said:

"Into the great cave of Osaka people have entered in abundance, and are [there]. Though people have entered in abundance, and are [there], the children of the augustly powerful warriors will smite and finish them with [their] mallet-headed [swords], [their] stone-mallet [swords]: the children of the augustly powerful warriors, with [their] mallet-headed [swords], [their] stone-mallet [swords], would now do well to smite."

Having thus sung, they drew their swords, and simultaneously smote them to death.

Jinmu’s earth-spider enemies have tails but on the whole, they seem like a host of warriors hiding out in the cave. As Reider notes, the thirteenth century Shinto priest Urabe Kanekata interpreted Jinmu’s enemy, the “earth spider” as an insult for a person hiding in a cave. He also claimed to have read that interpretation in an earlier text. Thus, the interpretation of the Imperial Enemy “tsuchigumo” as a barbarian/bandit is roughly contemporary with The Tale of the Heike. Perhaps Urabe would interpret the selection you quoted as a denigrated strange human enemy rather than an actual spider.

However, that’s not the end of the story. The “tsuchigumo” in The Tale of the Heike proper gets only that mention, but earth spiders star in other late Kamakura texts, including one that was attached to a manuscript of The Tale of the Heike. This text is the Tsurugi no maki (剣の巻) translated variously as “The Swords Chapter” or “The Book of the Swords” was [translated by A.L. Sadler] (https://archive.org/details/TheHeikeMonogatari) in 1918 (free open access version, a newer translation would be preferable for deep study):

During the summer of that year Yorimitsu fell sick of an ague, from which he could get no relief by any means; and after some time it recurred every day with burning heat and pains in the head, and thus he lay, sorely tormented, as it were between heaven and earth ; and so he continued for the space of thirty days. Now it happened one night that he was a little better and the fever had abated somewhat, so that the four faithful retainers, who had been nursing him, had retired to the guard room to sleep a while. As it grew somewhat late, Yorimitsu saw, from the shadow of the dim light in his chamber, the form of a tall priest, some seven feet high, coming stealthily up towards him, holding a rope to throw over him. Yorimitsu sprang up in surprise, crying out: " Who are you, you rascal, who dares to take a rope to Yorimitsu ? " And as he did so he caught up the sword Hiza-maru, that stood by the side of his pillow, and made a cut at him. Aroused by the noise, the Four Deva Kings came running in with all speed to enquire what it was, whereupon Yorimitsu told them what had taken place, and when they looked beneath the lampstand there was blood spilt there. Searching further with lights in their hands, they saw that there was a trail of blood from the doors of the chamber out on to the verandah, and when they followed this up, they found that it led to a mound at the back of the shrine of Kitano, and there stopped. So they dug into the mound, and there was a great spider, four feet across, which they seized and brought back with them. " Ugh ! " exclaimed Yorimitsu when he saw it, "how strange to have been tormented by a horrible thing like this for thirty days! You had better expose it on the highroad." So they stuck it on an iron spit and took it to the river bed and there left it : and from this time Hizamaru was known as Kumo-kiri (Spider-cutter), and after the days of Yorimitsu it passed into the hands of Dewa-no-kami Yorimoto. – (p. 332-333)

This "tsuchigumo", like other creatures in The Swords Chapter is more definitely supernatural than the main Heike spider, capable of spreading disease and changing form between human and spider. In another late Kamakura picture scroll, the Tsuchigumo sōshi, Yorimitsu and his sidekick are bedazzled but then attacked by a beautiful woman whose real form is a “yamagumo.” (tr. Mountain spider) As in The Swords Chapter, they kill the spider.

These stories about a monstrous/animal enemy taking human form to deceive and kill are very common in pre-modern and early modern Japanese writings. Although I’ve reviewed some evidence above that the “tsuchigumo” was not always understood as a literal spider monster, there’s also a lot of evidence to show that people in pre-modern Japan took supernatural shifters very seriously. Great scholars wrote as seriously about shapeshifting fox magic as they did about plants and animals.