As Machiavelli said, they're probably epitokes. I suspect they're nereid (often called ragworms or pileworms in the bait business) epitokes which consist of the whole animal rather than just the tail (more common in syllid & eunicid polychaetes). It's a neat process - the internal organs are absorbed while the body fills up with eggs or sperm, the parapodia (lateral appendages used for locomotion) enlarge & become paddle-shaped and the eyes enlarge. The bright red color comes from the eggs/ sperm packing the body. Swarming normally occurs around full moons just like coral spawning. This image shows a nereid epitoke -- Ryffel, did your guys look like this?
the worms commonly known as blood worms - glycerids and arenicolids - usually don't swarm in the same manner.