My 3yr old son is the same. He usually gets them when he's asleep in the car seat and will wake literally screaming about his Willy. Usually gets better if I can get him to do a wee. I've taken him to the gp and she said just to watch and wait at present.
I think it's not very comfortable for them. The foreskin doesn't retract properly until they get a bit older. DS used to complain about the same thing. It's normal for them to talk about it, but not for it to hurt hurt, IYSWIM.
Haha, my DP, when asked by DSS why they happened for no apparent reason, said something like "I sometimes wonder that, myself, but they're something all boys get", which worked well. Can you get your partner or other male figure he trusts to reassure him, from experience, that it's normal?
A few months ago while giving DSS a bath, he motioned towards his erection, sighed dramatically at me, and told me in an exasperated voice "I don't know why it does this sometimes! No body knows!" Which gave me a giggle.
DS is nearly 3 and potty trained. He sometimes gets what look like mini-erections and seems to find it really uncomfortable anc complains about it. He seems almost scared by it. I just tell him not to worry and it will go away soon, and distract him. This usually works but when it doesn't he ends up shousting "I've got a BIG WILLY!!! WILLY's BIG!!!" at the top of his voice in public.