The problem is that the saddle appears to be a good fit otherwise. It sits balanced on him, if I run my hand under the panels, it feels like even pressure, I can see daylight out the back of the gullet, and it seems to follow the angle of his shoulders well.
One thing someone suggested, since the saddle doesn't appear to be too narrow (thus causing pressure that way and preventing sweat) was to try a saddle pad with a little more padding on top (I normally just use a regular AP pad, but switched to the one you see in the pics). It did seem that the dry spots appeared smaller than previously (I only just started noticing this in the past few rides when it's been warm enough for him to really sweat under the saddle) which I kind of take that maybe that's the right path.
The reason I asked if dry spots always mean the saddle is too tight is mostly I was wondering if it could be a flocking issue. I was poking at the panels on my saddle and they seem to me to feel kind of...compacted. I bought the saddle used, so I'm not sure how old it is or how much use it's had.
Umm unless you are seeing something I'm not seeing, you have an even sweat mark of the panel, which means, you "don't" have dry spot and "the saddle fits"! If it is dry, it just means, well, it is dry, and maybe the sweat got soaked up by saddle pad, which is what you want.
When folks talk about dry spot, they are referring to a dry spot or two (normally circular form) inside wet panel pattern that indicates a pressure point from the saddle (most commonly from tree point). You don't have that.
And from all three pictures of the saddle on him, the saddle fits him well. Don't mess with padding. If you are still concerned, get a certified saddle fitter to look at your saddle, instead of asking important question like that at a BB where you get all kind of unqualified people to throw you some weird ideas.
Yeah what you really have is dry sweat mark, not dry spots. If you see a wet panel pattern with solid dry marks within the pattern (or the other way around), that is when you start to get really concerned.
The two side pictures with saddle on him show saddle to sit on him level and that also confirms good fit. The second one is hard to tell whether the tree shape follows his wither because the pad is in the way. Normally when you evaluate saddle fit, you want the saddle on the horse without the pad but from I see, the tree shape appears to be fine, or if any, maybe just a tab too wide, which can be easily corrected by a good saddle fitter. What I suspect is the tree shape is correct for your horse but your horse might have some muscle atrophy (not uncommon at all) right on both sides of the wither, which might make the saddle tree looks a tad too wide. In this situation, what you want is not to change tree width, but do add some padding by the saddle fitter to fill in the void. And once he builds his muscle up along his top line, you won't have this problem again.
Your saddle appears to have loop tree which naturally makes the pommel lower. Unless you have a horse with high wither, that won't be a problem. To see whether it causes wither pressure, sit in the saddle, and stick a dressage whip through the channel to see whether you have clearance. If you do, you are good to go. If you don't, your saddle fitter might be able to build up the panel evenly to give you more clearance. Unless the panel is foam injected, if this is a wool flocked panel, it looks to have collapsed (again just a guess, you need to see the bottom of the panel to know) and need some padding anyway.
He doesn't have high withers (which is why I got this saddle, because the shape of the tree fits how he's shaped. I plopped a "normal" wide saddle on him the other day, just to see how it looked and it was obviously too wrong, because it was too "V-shaped". ) and I have been able to stick a whip in there before (and I can fit a couple of fingers between his withers and the pommel when I'm in the saddle.
I am in contact with a saddle fitter now to see what they think. I'm definitely leaning toward the flocking probably needing to be re-done.