It looks like mechanical damage to me, but it could be Uronema. Eventually, secondary bacterial infection could become an issue. I don't see any redness that would indicate a direct bacterial cause. When a fish loses this much of its skin, it has difficulty osmoregulating. In some cases, they simply die from that. I've heard people say that moving the fish to water with a lower S.G. (say around 1.016) helps because that level is isotonic with their blood. Sounds good to me, but I don't know of any proof that it helps though.
Some follow-up questions might help:
1) Do you know what caused this, or did it just show up?
2) Is there a similar lesion on the other side of the fish?
3) How long has it had this and is it growing larger?
4) How are the other fish in the tank doing, and what species are they?
Jay