**Core Concept**
Pannus is a type of inflammatory tissue that forms on the surface of joints, typically in autoimmune diseases. It is characterized by the growth of fibrovascular tissue and the invasion of inflammatory cells into the joint space.

**Why the Correct Answer is Right**
Pannus formation is a hallmark of rheumatoid arthritis (RA), a chronic autoimmune disorder that causes joint inflammation and destruction. In RA, the immune system mistakenly attacks the lining of the joints (synovium), leading to the growth of pannus tissue. This tissue invades the joint space, causing cartilage and bone damage. The pannus tissue is rich in inflammatory cells, enzymes, and growth factors that promote joint destruction.

**Why Each Wrong Option is Incorrect**
* **Option A:** Pannus is not typically associated with osteoarthritis, a degenerative joint disease characterized by cartilage breakdown and joint pain.
* **Option B:** While psoriatic arthritis is an autoimmune disease that can cause joint inflammation, pannus formation is more characteristic of rheumatoid arthritis.
* **Option C:** Gout is a type of inflammatory arthritis caused by urate crystal deposition, but it does not typically involve pannus formation.

**Clinical Pearl / High-Yield Fact**
In rheumatoid arthritis, pannus formation is often accompanied by the production of pro-inflammatory cytokines, such as tumor necrosis factor-alpha (TNF-alpha) and interleukin-1 beta (IL-1β), which contribute to joint destruction and inflammation.

**Correct Answer: B. Psoriatic arthritis.