This is an abcess containing pus and usually containing hairs. It normally appears under the skin near the top of the buttock cleft. There may be a sinus (a passageway) out of which the pus drains. It used to be called Jeep's disease, as it was thought that bouncing on a hard jeep seat caused the condition. However, it has been shown that 7% of children (with no disease) have a skin-lined sinus in this area, so it is likely that the condition occurs because of a sinus that was always present from birth, and which may later get infected.
It is interesting that a bony spur or spicule on the coccyx is often related to a sinus in the skin at this point. It suggests to me that these two conditions are part of a spectrum of conditions which have their origin in the way that the spine is formed in the embryo and the skin closes over it. But that is just my guess.
There will be swelling and inflammation, and may be a discharge of pus.
pilonidal cysts can be surgically removed.
There is a good site, Pilonidal.org, run by a sufferer from the condition. You can read in Jennifer's personal experience how her 'coccydynia' turned out to be due to a pilonidal cyst.