Your puppy needs to be examined by a veterinarian. They will perform a fine needle aspirate (a small needle is inserted into the lump to gain cells for examination under the microscope). It may be an abscess, insect bite, traumatic injury, cyst, or mass. Once the lump is identified it can be treated appropriately.
It sounds like an Infected Abscess, which is very painful. I recently had to take my Chihuahua Lucy to the vet because she had the same basic thing. They lanced it to drain it, which she did not appreciate to much and I don't blame her, they put her on Antibiotics and it got rid of it. It has not come back! It is very painful and uncomfortable for your dog and needs to be taken care of immediately, because you don't want the infection spreading to her bloodstream. Emergency Vets are open 24/7, so I for her sake, I would take her in as soon as possible!
Could be a benign tumor. You need to let your vet know and let him see it incase it is cancer. They can take it off and it wont ever bother him