This spider seems to be a new update. It closely resembles your typical spider but whenever you hurt it it grows larger and larger. At a certain point it turns into this gray block with a sadistic smiley face with hearts floating over it.
The spider acts like your typical spider too (attacking you and hissing), but it does have the ability to poison you for a very short time. As I said, when you start hitting this weird thing it grows larger and larger. At a certain amount of damage (I don't know exactly how much) the spider turns into a gray block and begins to spawn hornets. The hornets are hostile and will fly at you and try to attack you. After a certain number of spawns the spider reverts to its regular form. It goes through this cycle about three or four times before it dies. It seems to spawn so far mostly in weird dungeons and in Mermen territory.
I personally would consider attacking this thing head on suicide, but if you are that crazy, GO FOR IT! The safest and easest way to kill the giant spider is to attract its attention. Then you should stand just behind a one wide, two tall gap in the wall so that it can't get at you. Than douse it with lava which will do damage really fast. Some hornets may escape the lava so make sure to have a battle ax handy.