A Minecraft Skin refers to the texture that is placed onto a player model or mob. The skin is divided into areas that act as the surface area of the character (For example, there's the front head area, left leg area, etc.).
A skin will only allow solid color; transparency is not allowed on the skin file except on the second head area, which is transparent by default; playing offline, pixels can be left free resulting in "holes" in the skin. The second head layer can be used to give the character glasses, hats, or other accessories (even a bigger head).
Minecraft World Texture
A skin can also refer to other textures in the game, such as block textures, item sprites, mob skins etc. A list of these can be found here.
It is worth noting that Pigmen, Zombie, and Zombie Pigmen mobs can use typical player skins (and vice-versa).
Skeleton mobs can use typical player skins as well, but keep in mind that they have their skinny arms and legs. (If a skeleton mob skin is used as a player's skin, their legs and arms will not be skinny.)
In order to use the player skin for Pigmen, Zombie, and Zombie Pigmen, you must align it to the correct place on the .png or the texture will be broken.
