Fetal hydrocele
Fetal hydrocele is the abnormal accumulation of fluid within the scrotum or sac that holds the testicle. In the third trimester of pregnancy, the testicles in the fetus move from the abdomen into the scrotum bringing a sac with them, allowing fluid to surround the testicle. In a baby who does not have the condition, the sac closes before birth, and the fluid is absorbed into the body. If the sac closes, but the fluid is not absorbed, the hydrocele is classified as noncommunicating. If the sac does not close, it is classified as a communicating hydrocele. This can occur on one or both sides of the scrotum.
More here on the topic from the Division of Urology, and the Division of Pediatric Surgery (general).