Your specialist has diagnosed that you have a cholesteatoma in your ear. A cholesteatoma occurs where part of the ear drum has collapsed. When the ear drum collapses, it goes from being a flat sheet to a bag-like shape. The baggy area collects dead skin and wax, and often gets infected, leading to a smelly discharge and hearing loss.
You have been put forward to have an operation to remove the cholesteatoma. Operations designed to achieve this are referred to as mastoid surgery.