According to Wikipedia, skin performs the following functions:
Protection: an anatomical barrier from pathogens and damage between the internal and external environment in bodily defense; Langerhans cells in the skin are part of the adaptive immune system.
Sensation: contains a variety of nerve endings that jump to heat and cold, touch, pressure, vibration, and tissue injury (see somatosensory system and haptic perception).
Heat regulation: increase perfusion and heatloss, while constricted vessels greatly reduce cutaneous blood flow and conserve heat. Erector pili muscles are significant in animals.
Control of evaporation: the skin provides a relatively dry and semi-impermeable barrier to fluid loss.
Storage and synthesis: acts as a storage center for lipids and water
Absorption: oxygen, nitrogen and carbon dioxide can diffuse into the epidermis in small amounts; some animals use their skin as their sole respiration organ (in humans, the cells comprising the outermost 0.25–0.40 mm of the skin are “almost exclusively supplied by external oxygen”, although the “contribution to total respiration is negligible”)
Water resistance: The skin acts as a water resistant barrier so essential nutrients aren’t washed out of the body. The nutrients and oils that help hydrate our skin are covered by our most outer skin layer, the epidermis. This is helped in part by the sebaceous glands that release sebum, an oily liquid. Water itself will not cause the elimination of oils on the skin, because the oils residing in our dermis flow and would be affected by water without the epidermis.