Squirrels will work their way out nearly to the end of a branch, cleanly cut the twigs off to fall to the ground in hopes that each twig also has acorns attached. Their success rate is not always 100% and homeowners will find twigs where clearly there were no acorns attached.
This annual activity may be disturbing, yet the leaves and twigs removed is a very small percentage of the canopy on any large established oak. Squirrels may climb and investigate young oaks, but finding no acorns, will not do much cutting if at all.
There really is not much you can do to prevent the squirrels from gathering acorns. If tree canopies are close to one another or there is a roof nearby, squirrels will jump from roof to tree or tree to tree to get to an oak. A squirrel will jump somewhere in the 6-8 foot range pretty easily. If the oak is free standing, attempts to keep squirrels from climbing the trunk have been tried. These are not very practical and visually unattractive.
There is no way to prevent acorns from forming as both male and female flowers appear on the same tree and the pollination is by wind. Once the acorns are mature, they will release from the tree and fall to the ground or in the case of the squirrels cut from the tree before they naturally release. The acorn is able to remain on the soil surface through the winter and sprout the following spring. Oaks will vary in the number of acorns produced year to year and we seem to have a heavy crop for 2014.
More information on squirrels and other critters can be found here at the Extension website Living With Wildlife http://web.extension.illinois.edu/wildlife/.