For example, a skin might have white hands so a Sim using it will appear to be wearing white gloves. A Sim's hands normally match the Sim's skin tone, though it is possible for a skin to have custom hands.
Originally, the default formal outfits used formal hands, but these hands were not used after Hot Date. However, a Sim's hands are separate hands are not part of body skins, but are defined separately in the Sim's character file. Each image file is that Sim's entire body or head, including skin (there are 3 skin tones - light, medium and dark - and it is common for the same outfit to be made in all 3 tones) and hair. Both are simple 256 color (8-bit) bitmap images, numbered to correspond with the mesh file which gives them the desired shape on the Sim.
Skins in The Sims are comprised of two parts per Sim: a head and a body.
