I noticed recently that there is a small red area on the scrotum (left side) of my two years old that is now swollen. could it be something serious?

No: not anything serious--could be a diaper rash.any other symptoms???

Possible: Torsion of the testicle (the spermatic cord gets twisted around) can happen,even in a 2 year old. Take the baby to an emergency room or a clinic where they can do ultrasound. Much delay ,if it is torsion, may result in testicular damage.It is now 4 am in Jordan but maybe you will see this. It may be nothing serious like a bug bite.Best wishes for your baby.