Machtesh is one of many Hebrew words that don’t really have a translation. Many people would describe it as a crater because it looks like one. This is wholly inaccurate.
Machteshim are formed when water seeps into the peak of a large mountain, eroding from the inside, creating a large lake. As the water level increases, the erosion increases, until the top of the mountain collapses inwards, creating a large lake with lots of debris at the bottom. The erosion process continues, until a gap erodes in one of the walls. When this happens, the water flows out leaving something really big that looks a bit like a crater, but with much steeper walls and (depending on the size of the mountain) often much, much, much bigger. Machteshim are spectacularly impressive natural occurrences because of the sheer drop and the sheer size.
Five machteshim exist in the world, three in Israel and two in the Sinai Peninsula of Egypt, although there is controversy over one of the Egyptian machteshim, since an entire side is non-existent. This means that it could be a machtesh whose walls have collapsed (The Egyptian theory) or some other crater type structure that happens to have a very steep wall on one side (the sceptics’ theory).
The phenomenon was first observed in Israel, when two of these structures were discovered, and labelled HaMachtesh HaGadol, or the big machtesh, and HaMachtesh HaKatan, or the small machtesh. Subsequently, Machtesh Ramon, the largest machtesh in the world, was discovered, just south of Be’er Sheva, and a town was built next to it, called Mitzpe Ramon.