/u/PioneerStandard's answer is partially correct, but not fully correct. While these bulges do occur because the drywall is not fully flush to the support behind it, bulges this big are usually because of either a foreign object (insulation, staple, etc.) rather than a drywall screw not fully seated. This also often occurs when the top plates sit back a bit from the studs.

A proper fix is to cut out the bulged area, remove all the loose material and mud over it. Answers that suggest hitting the area with a block/hammer, while may appear to work, only serve to break up the gypsum between the layers of paper. It may work, but it's not an actual fix.

No. The bulge is a broken patch of drywall. Put new screws below it into the studs on a non fucked area of drywall as 2 inches for the edge of the bulge. And cut the bulge out. Then patch the hole with a piece of drywall, mud, and drywall tape.