Ginger is correct. Even if a dog has been neutered they still get the swelling on the penis. Dogs, like people, masturbate because it feels good to them. Neutering them will not prevent them from doing this, it merely prevents them from being able to impregnate a female, so if they are in the mood, they can still bet an erection. The bulbus glandis can be quite large, depending on the size of the dog it can be about the size of a large lemon, so it can be kind of startling to someone who has not had any experience with dog breeding. If there is another lump on your dog's penis you should probably have the vet check it out ASAP to make sure it's not something that needs immediate attention.
Ghilly
I am sorry, but email addresses are not allowed in posts on the forum, as that is to some extent personal data. There is a system which automatically blanks them out, (beyond my jurisdiction.)
If you go to your own personal member page, you should be able to upload any number of photos to your photo collection, and the picture could be viewed there.
It is typical of the bulbous glands to come up suddenly, quite large and hard and then to disappear soon after. A lump on the base of the penis which seems quite scary, then suddenly disappears, to come up again another time is almost always bulbous glands.
The fact that he's been neutered....right, how long ago was he neutered? If fairly recently, then there is plenty of testosterone still in his system and may be for a few weeks yet -to cause sexual stimulation like that.
In fact -I knew a dog who had been neutered, and even 1-2 years later he was capable of a complete mating with a female -with a 'tie' also!
But there was nothing wrong. The neutering had 'worked' and the female (entire) did not become pregnant.
It is also possible he has an abscess, large cyst or some other thing. I can't tell you. I think you should take him to the vet for a quick check -if you are worried or unsure.