From what I've gathered about woodpecker behavior, there's essentially two sorts of pecking. In the spring, a certain amount of percussion is mating behavior: Hey gals, get a load of my noise! (We also have pygmy nuthatches, tiny things that could bathe in a tablespoon, and they're just as loud and destructive as woodpeckers on house siding. I aim a BB gun just to one side of such pests, but they're back in a minute or two.)
Then, actual feeding behavior. Woodpeckers will try drilling here, there, and everywhere looking for feed, and anytime their work produces a hollow sound, that would mean some insect or grub within produced that hollow. Unfortunately, house siding often covers voids that seem to tell the birds there's feed lurking. Before we covered our old wood siding with steel (for fire protection mostly), I wondered why there were perfectly straight lines of holes. A builder friend pointed out that the tiny gaps between inner sheets (T-11 plywood, or whatever it was called) would trick the birds into thinking they were insect galleries.
As a complete amateur, I wouldn't argue with anyone who says a woodpecker will hollow out part of a healthy tree for a nest site, but most of the woodpecker work I see in trees can be traced to carpenter ants or similar within. I dropped a white pine (upstate NY) for a friend a year or two back that a pileated woodpecker was tearing apart. The inside of that tree was riddled with carpenter ants.