Skins is a feature, introduced with the Celestial Patch (24th Nov, 2017), which lets you alter the appearance of a selected range of heroes while granting them bonuses while wearing the skin.
They can be acquired as Universal skin shards from defeating bosses on Celestial Island once your Watch Tower is at least level 11 and you may encounter rare, rainbow aura islands, which grant 1 shard as well. The loot is 2 shards at a time, and a total of 10 fragments are required to craft a skin. They can be part of Value Packages and Events as top-tier rewards.
The skins that are received from skin shards are low tier skins, you can fuse 5 low tier skins into 1 High tier skin in the skin fusion button in the top right corner of the screen. High tier skins come in 2 variants, Limited and Legendary. All High tier skins have Limited and Legendary variants, and this is useful in identifying whether or not a skin is high tier. All High tier skins start out as limited, and you can upgrade them to their legendary variants, which have better stats, with 25 skin xp. Low tier skins are worth 1 skin xp, and High tier skins are worth 5 skin xp.
There is also an item called a skin chest, which can be bought from Chest Events and can be won in multiple other events. Each chest will give you 50 Shards (5 Skins) upon opening.