The stuff hanging from trees down south is spanish moss, it is a bromeliad, it is NOT what's being discussed here. And yeah, it is often rife with chiggers.
As far as I can tell what's being described here is PEAT MOSS, aka sphagnum peat moss, more or less aka peat -- the very fine dark-brown dusty-dirtlike stuff that is the result of sphagnum moss (an actual semiaquatic moss) long-decomposed beneath sphagnum bogs. It is used as a garden amendment, also very rarely as bedding for horses with bad respiratory allergies. IT IS HUGELY DUSTY unless dampened. (They dampen it for horse-stall use). (It is btw rather *difficult* to dampen). Thus, in a coop you have a choice between hugely immensely dusty (not good) or damp (not good). I would not personally use it, except *concievably* in a basically open-air coop and even then I can't exactly think why I might use it over other things. You can buy it in wee bags or in half-cubic-yard bales or by bulk dumpload. But I would really not suggest it for coop bedding b/c of the dust factor.
There is also actual sphagnum, which is sphagnum moss in a not-decomposed state, used by florists and such. It is not really relevant to this discussion though because I doubt anyone would have access to sufficient quantities.
Pat