They may occur anywhere
on body but scalp, ears, back, face, and
upper arm, are common sites for sebaceous cysts. Blocked sebaceous glands, swollen hair follicles and excessive testosterone production will cause such cysts.
Generally no treatment is required but they become painful then it means they are infected,Then surgical excision by traditional wide excision, minimal excision, and punch biopsy excision may be required.
Other possibility is of swollen lymph node.