These are tumors that grow on one of the nerves going into the ear canal. The eighth cranial nerve carries information from the ear to the brainstem. The tumors are actually on the portion of the nerve that is responsible for balance and equilibrium (vestibular), but this runs adjacent to the nerve for hearing (acoustic). 

The tumors arise from the covering or sheath around the nerve. These are slow-growing tumors that are benign. Because of their location, as these tumors grow, they can affect the hearing in that ear. There are other important nerves and structures nearby, so large tumors can cause many other symptoms. For example, the neighboring facial nerve is responsible for muscle strength in the face. Small tumors can be observed (frequent MRI's), and gamma-knife treatment is a good non-operative option for many patients. However, some tumors, particularly larger ones, are best treated with surgery.