Final answer:
Scabies is the condition characterized by red, watery vesicles or pus-filled area caused by itch mites burrowing under the skin.
Step-by-step explanation:
Red, watery vesicles or pus-filled area caused by itch mites burrowing under the skin are known as scabies. It is a parasitic infestation of the skin caused by the microscopic mite Sarcoptes scabiei. Scabies can cause intense itching and the development of a rash, particularly in areas such as hands, wrists, and between fingers.