Its body resembles an average large dog, though its head is completely covered with worms.
Wormheads are essentially upgraded versions of the Groaners. Due to Silent Hill's corruptible force, the Groaner transforms into a more grotesque and powerful creature. Its head is completely covered in what seems to be a mass of worms (hence the name) and it has gained more mass than its Fog World counterpart.
They share the same symbolism as the Groaner, being Alessa's fear of dogs, as well as the Night Flutter's symbolism of Alessa's aversion toward, worms, snakes, etc.
The Wormhead could also prove symbolic of Harry's belief he may be losing grasp on his sanity, and could also stand for the overall deterioration of all things he had originally known as orthodox. Worms are common decomposers, and seeing a mass of the creatures completing shrouding sight of a dog's head could be a metaphor for one's sanity being eaten away.