There are many things it could be, but here is my experience.
A mare I work with, a 16 year old Welsh Cob, had a bump very similar to this. It was up a bit closer to her withers then your boys is. It wasn't super sensitive, but out of no where one day it became itchy... and I mean ITCHY! All you had to do was lay a finger tip on it and her lip would go out, and she would rock back and forth. It was also apparent that it was uncomfortable. So we had the vet out and first tried some ointment on it to see if it was a surface fungus. It didn't go down but within five days her discomfort had greatly increased so we had the bump removed. The vet though it could be a sarcoid, a fatty tumor, or something that had been pushed under the skin when she had rolled in the pasture. Her "bump" went all the way down to the muscle, and was a descent size. When you looked at it from the top it looked about the size of your boys.
We sent the mass out to have it checked and it came back... as a fungus. A very nasty fungus! The vet said that it is not seen very often. The mares personality immediately improved, and I am so glad that we had the bump removed. Because of the size of the wound, and the fact that her stitches kept pulling apart, it has been a relatively long recovery. But! She is happier, healthier, and much easier to handle.
Now that is probably not what your boys problem is, but it is probably in your best interest to get the vet out to have a look. It could be nothing, but you want to make sure! =]