Mange is caused by one specific kind of mite, the demodex mite, which is microscopic. The mite does not burrow into the skin itself, but actually lives in the hair follicles, which is the cause of the hair loss. The mite prevents further hair from growing, acting as a plug. The scabs and irritated skin are a secondary infection caused by the mites.
Mange is not contagious. Vets believe the demodex mite lives on the majority of dogs, and can be inherited. A break out of mange is a sign of the mites multiplying excessively, the cause unknown. However, young shorthaired dogs, or weak, elderly dogs seem to be afflicted the most.
Mange also shows no signs of itching. The dog does not seem to be irritated by the demodex mites. The cheyletiella mite, which is the most common, and the sarcoptes mite, which favors the ears and elbows, are contagious to humans. These mites do cause itching and scabbing mistaken for mange. No hair loss is related to the cheyletiella mite, and very little to the sarcoptes mite.
My dog was recentely afflicted with mange, and I had to do a bit of research. The secondary infection, generally pustules, can be treated with antibiotics. You should take your dog to the vet. There, they can do a skin scraping to see if the mites are present. If so they can recommend a prescription insecticide applied in a dip. It is expensive (cost me $16 a dip, and I had three done), but it works.