What could the bulge at the side post-mastectomy be?

This is most likely leftover fatty tissue. Your doctor can try to reduce the size of this area with liposuction. 

It is difficult to know for sure based upon your picture, but bulges lateral to the expander after mastectomy may represent fluid, a partially inflated expander or subcutaneous tissue ('back fat"). Fluid will resolve with time, as will many "lumps and bumps" related to the surgery, the expander will be replaced by a permanent implant and at that time, if still present, liposuction of the bulge if it is subcutaneous tissue exaggerated by removing the breast, can be smoothed away for a softer, more natural contour. Give yourself more time. Good luck and Take care.

...an important question:Did you have a tissue expander placed?If you did, the fluid placed inside it will take the path of least resistance and force the expander to take an awkward shape until enough fluid has been added to start forcing the expander out away from your chest wall.  It's not abnormal for things to look really weird at first.  Give it some time and it should work out well.