It is not a good sign. In fact you should take your pet to vet as soon as possible. This can be turned into cancer as well. If your dog is mature enough then there are more chances for it to catch this disease. Cancer can never be diagnosed with complete certainly unless and until few tests like Biopsy have not been done. If your dog's testicle will be proved to be cancerous then they will have to be removed before they create any further complication to your dog's health.