Dropsy is the buildup of fluid inside the body cavity or tissues of a fish. As a symptom rather than a disease, it can indicate a number of underlying diseases, including bacterial infections, parasitic infections, or liver dysfunction.
Because dropsy is a symptom of an illness, its cause may or may not be contagious. However, it is standard practice to quarantine sick fish to prevent spreading the underlying cause to the other fish in the tank community.
By the time a disorder reaches the point of causing dropsy, it can often be fatal and at the very least the fish is very ill and requires immediate quarantine and treatment.