I've heard different things. what exactly is erythema toxicum?

Transient rash: Erythema toxicum is a very common rash affecting newborn babies, typically shows up on second day of life and stays 2-3 days. Cause is still elusive and no treatment is necessary. The original meaning of erythema in greek was "bug bite.".

A newborn rash: It is a benign newborn rash interpreted by many parents as " allergic reaction, a spider bite , a bug bite, etc". None of these are correct.It is a skin condition that appears within 1-2 days after birth, goes away on its own within a week.Cause is unknown.Even the pustular fluid in the rash contains harmless blood cells.Not contagious.Do not require treatment.Goes away on its own!