What does this biopsy result mean

I have a rash on my arms which I have had for over a year which is getting worse and now is starting on face.  I went and saw a dermatologist and she had me get a biopsy on three places that the rash was on (2 on arm and one on face).  The results were per below.  She took me off the steriod medicine and rash has been getting worse.  Started me on UV light treatment 3 times a week. What is chronic inflammation? What is inflammatory follicular change? She did not know what was causing it.  Said it was not psoriasis, but said it was serious and could turn into some kind of cancer. Does this indicate a need for light treatment?  Regular biospies? (picture showing some of rash on arm.)

Impression:  GRANULOMA AND CHRONIC INFLAMMATION
Interpretation and comment:  The microscopic slide contained three biopsies that show no differential staining.  Oneshow an apparent punch biopsy in which there is a granuloma with lymphocytes, histocytes and giant cells that is probably related to inflammatory follicular change.  Two other biopsies show a superficial chronic  inflammatory process with some solar degeneration of dermal connective tissue and without evidence of basal, squamous, or melanocytic malignancy.  There is no granuloma or eosinophilia, while the changes in these two latter biopsies could represent inflamed, benign keratosis.