An epidermal (also called sebaceous cyst) is the most common type of skin cyst. It usually has a pit (most commonly in the centre of the cyst) called the punctum.
Imagine if part of the skin invaginates inside the skin (as if you pushed part of the skin inside your skin). Normal skin continually sheds keratin (this is most obvious in the scalp when seen as dandruff).
As this invaginated skin sheds keratin, it has nowhere to go so it is trapped under the skin. This is the easiest way to understand epidermal cysts but is not the mechanism by which they occur.
Epidermal cysts may get infected and form an abscess or collection of pus. Infected epidermal cysts can be treated with antibiotics but if an abscess develops it needs to be drained surgically.
Excision of uncomplicated epidermal cysts can be done under local anaesthetic. This depends on size, position and number of cysts as well as the patient’s choice. It usually involves excision of an ellipse of skin including the central punctum.