A cyst can occur anywhere. It is basically an encapsulated swelling in the tissues. Cysts can be benign or malignant. The usual way to determine this is with a biopsy (tissue sample).
More often than not cysts are not malignant but if they are then they can often be removed successfully. This is because if they are encapsulated then they are usually contained.
The word cyst is often used to describe a benign growth, whereas the term 'tumour' is usually (but not exclusively) used to describe a malignant growth.