This is Star. She was just about to head out on the dog-show circuit with a professional handler when her owners noticed a small spot of hair loss on her lip. She surely looks great otherwise and really ready for the show ring. Unfortunately, those folks are really competitive and there is no point sending a dog out to compete with even a small and inconsequential blemish.
This is localized demodecosis, not to be confused with generalized Demodectic mange. True, they are caused by the same species of mite, but localized cases generally do not progress much, and resolve spontaneously. They most often occur in a young dog who has undergone a bit of stress. [Star had just finished her first estrous cycle, or heat cycle, two weeks earlier.] You can do virtually anything for these dogs and they will get well anyhow. Prescribe your favorite cream or vitamin, or try a simple laying on of hands, accompanied by some impressive mumbo-jumbo (my favorite), and you can receive credit for the cure.
If there are secondary infections in the hair follicles, oral antibiotics would certainly be helpful. If the spot is persistent (unlike most), topical treatment with amitraz in propylene glycol will usually speed things along. These dogs are most definitely not candidates for whole-body dipping.
One caveat: if you see this in an older dog, look for some underlying disease process that would be undermining the dog’s body defenses. Sometimes skin problems are just skin problems, and sometimes they are the tip of a whole-body problem iceberg. A dime-sized area of hair loss could tip you off to an early cancer. Don’t lose sleep over that. Just remember that when your veterinarian looks at the whole pet when he "just has a skin problem", he’s being an animal doctor, not a "spot doctor".