From OMIM
Epidermal nevi are congenital lesions that affect about 1 in 1,000 people. They appear at or shortly after birth as localized epidermal thickening with hyperpigmentation that frequently follow the lines of Blaschko, suggesting that they result from postzygotic somatic mutation in the skin (Paller et al., 1994). A rare subgroup of epidermal nevi is clinically indistinguishable from other epidermal nevi, but displays histopathologic features typical of epidermolytic hyperkeratosis (see EHK, 113800), and patients with this type of epidermal nevi sometimes have offspring with generalized EHK (Paller et al., 1994). Woolly hair nevus is a rare condition characterized by the development of woolly hair in a restricted area on the scalp, either present at birth or becoming evident later in life when scalp hair begins to grow. Woolly hair nevus can be an isolated finding or can occur in association with additional ectodermal defects; epidermal nevi have been reported in association with woolly hair nevi (summary by Ramot and Zlotogorski, 2015). Nevus sebaceous, a benign congenital skin lesion that preferentially affects the scalp and face, is characterized by hairless, yellow-orange plaques of various size and shape. Histology shows that nevus sebaceous is a hamartoma consisting of epidermal, sebaceous, and apocrine elements. About 24% of nevi develop secondary tumors, some of which may be malignant (summary by Groesser et al., 2012). Also see giant pigmented hairy nevus (137550) and malignant melanoma (155600).  http://www.omim.org/entry/162900

From MedlinePlus Genetics
An epidermal nevus (plural: nevi) is an abnormal, noncancerous (benign) patch of skin caused by an overgrowth of cells in the outermost layer of skin (epidermis). Epidermal nevi are typically seen at birth or develop in early childhood. Affected individuals have one or more nevi that vary in size.

There are several types of epidermal nevus that are defined in part by the type of epidermal cell involved. The epidermis is composed primarily of a specific cell type called a keratinocyte. One group of epidermal nevi, called keratinocytic or nonorganoid epidermal nevi, includes nevi that involve only keratinocytes. Keratinocytic epidermal nevi are typically found on the torso or limbs. They can be flat, tan or brown patches of skin or raised, velvety patches. As affected individuals age, the nevi can become thicker and darker and develop a wart-like (verrucous) appearance. Often, keratinocytic epidermal nevi follow a pattern on the skin known as the lines of Blaschko. The lines of Blaschko, which are normally invisible on skin, are thought to follow the paths along which cells migrate as the skin develops before birth. Keratinocytic epidermal nevi are also known as linear epidermal nevi or verrucous epidermal nevi, based on characteristics of their appearance.

Other types of epidermal nevi involve additional types of epidermal cells, such as the cells that make up the hair follicles, the sweat glands, or the sebaceous glands (glands in the skin that produce a substance that protects the skin and hair). These nevi comprise a group called organoid epidermal nevi. A common type of organoid epidermal nevus is called nevus sebaceous. Nevi in this group are waxy, yellow-orange patches of skin, usually on the scalp or face. The patch is typically hairless, leaving a distinct region of baldness (alopecia). Similar to keratinocytic epidermal nevi, nevi sebaceous can become thicker and more verrucous over time. In about one-quarter of people with a nevus sebaceous, a tumor forms in the same region as the nevus. The tumor is usually benign, although rarely cancerous (malignant) tumors develop.

Some affected individuals have only an epidermal nevus and no other abnormalities. However, sometimes people with an epidermal nevus also have problems in other body systems, such as the brain, eyes, or bones. In these cases, the affected individual has a condition called an epidermal nevus syndrome. There are several different epidermal nevus syndromes characterized by the type of epidermal nevus involved.  https://medlineplus.gov/genetics/condition/epidermal-nevus