**Core Concept**
Psoriasis is a chronic autoimmune skin condition characterized by thickened, scaly plaques resulting from an abnormal immune response. Topical and systemic corticosteroids may temporarily improve symptoms by suppressing the immune response, but their long-term use can lead to rebound effects and worsening of the disease.

**Why the Correct Answer is Right**
The patient's symptoms are consistent with a condition known as **generalized pustular psoriasis**, which occurs when the suppression of the immune response by systemic corticosteroids is suddenly withdrawn. This leads to an uncontrolled release of pro-inflammatory cytokines, causing widespread pustules and erythema across the body. The loss of plaque margins is due to the rapid progression of the disease.

**Why Each Wrong Option is Incorrect**
* **Option A:** This is not the correct answer, as generalized pustular psoriasis is a specific condition that occurs after withdrawal of systemic corticosteroids from a pre-existing psoriatic condition, not a new onset of psoriasis.
* **Option B:** While psoriasis can worsen after withdrawal of systemic corticosteroids, the term "psoriatic flare" is too nonspecific to be the correct answer.
* **Option C:** This option is not relevant to the scenario, as the patient had pre-existing psoriasis and was on systemic corticosteroids.

**Clinical Pearl / High-Yield Fact**
When stopping systemic corticosteroids in patients with chronic autoimmune conditions like psoriasis, a "steroid withdrawal reaction" can occur, leading to rebound worsening of symptoms. This is due to the sudden release of pro-inflammatory cytokines and should be anticipated in patients on long-term steroid therapy.

**Correct Answer:** D.