Rain rot (a.k.a. rain scald or dermatophilosis) is a skin condition on horses caused by a bacteria living on the horse's skin. If the horse is in wet or rainy conditions for long periods of time, the bacteria will thrive wherever the skin stays wet. Typically you'll feel bumpy little scabs at the root of the hair along the horse's back, rear, under the mane, and head/neck.
In mild cases, the horse may just have a spot containing a few flat scabs around small mats of hair. When the scabs are removed, the skin's surface is slightly moist and sometimes raw, so the horse's skin can be pretty sensitive. In more severe cases, the coat can feel hard and painful, with many scabs lying next to each other. Treating and removing these can result in patches of hair falling off, leaving bare skin.
To treat rain rot, we typically give horses a bath with an antibacterial/medicated shampoo, letting the shampoo sit on the horse for 10-15 minutes before washing it off. Then we will apply a product like Shapely's Original MTG or something similar. We try to gently remove as many of the scabs as we can, without making the horse too sore. We also might alternate this process with applying a medicated powder (such as Gold Bond's medicated foot powder) all over the affected areas, because this helps to dry up any moisture against the skin that the bacteria is living in. Doing this for several days usually clears that rain rot right up!