More often than not kidney cysts are a type called simple kidney individual cysts which are round sacks of fluid that form on or inside the kidney. Simple cysts do not damage the kidneys or affect kidney function.  Polycystic kidney disease, another type of kidney cyst disease. It is an inherited condition that causes cysts to form in the kidneys causing progress damage to the organ as they grow in size and number. Another type of cysts are complex cysts. These need to be monitored intermittently for changes that could become cancerous.