Piercing of lips (or other parts) can lead to formation of abscess, cyst or scar tissue. The formation of cysts is perhaps due to the fact that epithelial cells of the skin are sometimes easily displaced into the connective tissue, become encapsulated and result in a cyst.
You should consult a surgeon for a proper diagnosis and management. Generally these cysts cause no harm but may require treatment due to cosmetic reasons. The various surgical techniques include excision, incision and drainage, trephination as well as laser treatment.
Hope it helps.