In my mind, the skills are what most concretely define the characters. The style a player acts out a character, mood or personality, is important, but is hard to define in even the most detailed system. What a character can do, however, is never more concretely described than in their skills. A skill defines a specifc ability, usually learned, that a character posesses. It is another trait of the character, and operates with the same levels descriptive levels, often defaulting without trainingl, to Mediocre. Some skills are more difficult and may default to Poor, or not even have an untrained default.
Skills are fairly specific, like Juggling and Swimming, while being listed in a category, in this case Dexterity. Having a category not only makes the skill easier to find on a character sheet when you need to, but when it comes time to create a character, the categories are also helpful.
Just to bring these ideas together, and to let you see a little bit of where we are going, lets talk for just a second on how skills work. Your character's skill level is a word on that trait ladder, from Terrible to Superb. When you need to do something important in the game, you will be asked to roll some dice to give a result. If your Good at Swimming, and you rolled a +1 on the dice (more on that later) you did a Great job at Swimming in whatever situation you were in, and things will continue on. The characters skill level is important, as the dice tend towards not adding or subtracting more than 1 level, and other things like equipment or circumstances also don't tend to affect the rolls by more than one level. Next up,Gifts and Faults. Then we'll move on to actually making a character.