Ringworm is a fungal infection of the skin caused by a variety of fungus. The reason the skin turns red around the edges is because the fungal spores on the skin are infected and the infection spreads out in a circle.
The ringworm fungus spreads into a circle, leaving the skin on the inside of the circle looking normal and the skin that forms the outer circle looks red and scaly.
Ringworm doe look like a worm in most cases. This is because the ringworm fungus spreads out in a circle making that area of skin appear normal in the middle and red around the edges.