I read this this morning but wanted to think about it before replying.
Without seeing it in person, it looks like a wart type growth often found on certain breeds of dogs, especially poodles. It should not be contagious.
It could be an abscess, I personally would try to lance it and see if anything comes out. You can do this with a sterile needle ( like one for giving shots) easiest. If nothing comes out then I would not be concerned. If anything does flush it out with a syringe (without a needle) and a sterile solution such as an iodine type solution, make sure it's clean and just watch it.
If it an abscess and you do nothing most likely it will rupture itself and drain and either heal fine, or get infection ( open wound ).