Skills are used to improve your character in a more direct manner, such as increasing the players heal speed. All skills have a base attribute which limits the level you can upgrade your skill. A skill can only be a 1/3 of its base attribute up to a maximum of 10. For example if your strength attribute is 15 you can only up increase skills with that base attribute up to 5 until you increase your strength.
There are 3 different types of skill party, leader and personal.
These provide a bonus to the players whole warband. The value used is the highest in the party, with a bonus from every 2 levels the player has in the abillity (only when another characters value is used).
This skill affects the whole warband like a party skill but only the value from the leader of the group is used, so for the players band it is their skill level.
These skills grant a bonus or ability to only that person and it is always their value that is used not the highest in the group. These are mostly the combat skill such as power strike and shield.