An adaptation of a Swiss horror novella "The Black Spider" by author Jeremias Gotthelf (AKA Albert Bitzius), about a town with a knight problem, so they make a deal with a very suspicious man to help them in their time of need.
The creature is the Kanbari nyūdō, that creepy hairy guy watching you go to the bathroom on New Year's Eve.
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A person gets a kiss on the cheek and, eventually, spiders emerge out of that spot. Eventually it grows until it's the shape of a spider and the person turns into a spider, killing so many people in town. There's a lot of death and violence in this episode, with a character punching the teeth out of another and threatening to flay a village.