Often it also means they need their sheath cleaned.
I did have an older horse that seemed to have a swollen sheath just because he was standing around too much.......as soon as he was ridden it went down. Then it would stock up again. Ride him, it went down, etc. So I think it was circulatory with him (he was around 30).
If it happens with my other boys, I know I waited a little too long for sheath cleaning.
Although, for the first time the other day my 20 yr old gelding had a swollen sheath and I checked him and he wasn't particularly dirty. And when I rode him it went down. But the weather has been cruddy and he's been standing around most of the time, so I'm hoping it's just lack of exercise and not that's he's showing his age.
Oh, and they CAN get cancer down there. It seems to be common in Paint horses in my experience. Come to think of it, my 30 yr old Paint also had some small cancer lesions on his penis but the vet said he would die of something else first, and he did. But I also know a Paint that was put down for a large growth inside his sheath that made him uncomfortable.
So at the very least, you could have him cleaned and see if that helps.