Soft-tissue tumors may arise from almost any tissue within the hand and may be either benign or cancerous.
Affected tissue may include nerve tissue, a tendon sheath, fibrous tissue, fatty tissue, or skin, and for this reason any lump within the hand needs to be evaluated by an experienced hand surgeon as soon as it is discovered.
In general, cancerous tumors are firm in consistency and do not both increase and decrease in size.  Rather, they continue to increase relentlessly.
If there is uncertainty as to the diagnosis of a tumor, then a biopsy should be done.  This involves making a small incision over the tumor and removing a tiny piece of tissue for a pathologist's inspection.  Examination of the cells under a microscope will disclose whether the tumor is benign or malignant.
Malignant tumors may be aggressive and can result in dire consequences, including amputation, if not caught early enough.  As with any cancer, they may also spread to other parts of the body.