It is a fungal infection of hair follicles leading to loss of hair in the affected areas. It may or may not form a scaly or crusty ring. I see it most often on the face or ears of kittens or cats, but it can infect any part of the body that is furred. Ringworm is normally a self-limiting infection which means that a cat will eventually get rid of the infection even without treatment, if the cat has a normal immune system. We generally treat ringworm to limit the spread of of infection to other fur bearing animals and people.
Children are especially vulnerable.
The infection is spread by infected hairs or spores in soil. Hairs infected with one type of ringworm fungus, microsporum canis, will often fluoresce bright green under ultraviolet light. There are other more accurate tests your veterinarian may use. I do a fungal culture by plucking a few hairs from a suspicious looking area and placing it in a special medium that will change color within 14 days if the fungus that causes ringworm is present and starts to grow. Shaving affected areas to remove as many fungal spores as possible.