The following discussion refers to what are commonly called sebaceous cysts by doctors and lay persons. Sometimes they are called epidermal cysts on the body and pilar cysts on the scalp. Cysts are encapsulated nodules that develop from oil duct cells and contain a smelly, cheesy substance made of keratin, a skin protein.
Cysts are virtually never cancerous.
If they do not bother you, then ignore them. Deeper, fixed lumps are not cysts and may represent a cancer. Most epidermal cysts have a communicating pore like a blackhead. Some benign fatty tumors can mimic cysts. They tend to have a fleshy consistency and are called lipomas.