This is a rare complication of skull fracture that may develop when there is a linear fracture of the skull with separation of the edges of the fracture and laceration of the tough membranous covering of the brain called the dura mater. When this happens, the natural pulsation of the brain caused by the throbbing of the arteries causes erosion of the bony skull. This complication can occur in adults, but it is most often seen following fracture of the skull in infants and young children. Initially, the condition can be confused with a cephalohematoma, but the correct diagnosis will become apparent on a simple skull xray.
Treatment involves surgical removal of the cyst and repair of the tear in the dura.
I have encountered precisely one of these in 24 years of practice.