As a humble small medical student, my guess is Ichthyosis, the scaling, but not really erythema, doesn't look like fungal or other infection, also doesn't look like Psoriasis....so, I guess ichthyosis (but I have never seen any children with ichthyosis yet, in life of study so far )
I will call this Infantile seborrheic dermatitis....not sure whether this child is a neonate. Early lesions don't have any gross inflammation and some develop a subtle erythema and very few will develop a stark erythematous sclay picture. Regarding etiology a) some believe it is response of the sebaceous glands to persisting maternal hormones ( not sure which one...but i suspect it has to be androgens ) b) another theory is that it is fungal overgrowth, due to maternal antibiotics given prenatally ( according to my professor...it is an inflammatory response to the fungus, which manifests as excess sebum production..becos there are only a few ways that an infantile immune system can respond and this excess sebum could be a way to suffocate and wash out the fungus ) ...I can't vouch for that ( even though it's my professor's words ) Let's see what the big guys have to say