What kind of bug bite looks like a mosquito bite, start off small and diffuse spread like a mosquito bite, but very likely isnt one since it appeared on a covered area?

Few bug bites are have features that allow identification of the bug. The description is not specific to any one in particular. If caught in the act you know. If the area is red with increasing size/drainage/has a dark cavity/it may be infected. If not, it should fade.

This may not be an insect bite, but either a reaction to something that you touched or ingested; those kinds of reactions can begin as a red bump and then enlarge or lead to more bumps. It is unclear if you meant that there were more bumps or the initial one is larger. Also possible is a blocked skin gland that is infected. Best to have it examined for proper diagnosis.