Skinning basically allows players to retrieve leather and hides by skinning animals in the world you kill. Both leather and hides are used in the leatherworking profession. Some recipes in blacksmithing,eingeering, and tailoring also require leather. Pretty good money making profession as well if you sell the leather you skin on the auction house. Example of what you can sell you can see here 
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If you're looking at picking this skill up you'll find out soon its really easy to level up. Basically run around and find low level wolves,bats,bears, anything you can find that you can skin to start off. Once you hit about 50 skinning find some higher level mobs to raise some more. Best thing to do is to pick it up as you're leveling up. By the time you hit 50ish you'll have skinning maxed out easily. For more information on this profession check out our “Profession Forum”.
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Skinning