Now that you mention it, I do know of two cases where cysts disappeared (or became too small to notice). Two of my daughters started using birth-control pills and developed cysts in their breasts. They stopped the pills and the cysts disappeared.
I have several sebaceous cysts that come and go. One on my wrist, one on my back. They come and go sometimes. Some don't, some do. Just depends on your body.
I have never heard of sebaceous cysts shrinking and growing and shrinking. I have lots of cysts and this has never happened to me.
That might be the case. If it causes you pain, or is getting progressively worse, I would show it to your doctor when it has 'flared up'. Otherwise, it shouldn't cause you too much of a problem, (other than for appearances).