Avatars in Second Life, Inworldz and other OpenSim grids, have a shape and a skin. The skin is a texture in three parts: the head, the upper body and the lower body. It's one of the things you must have... you can change and replace your skin, but every avatar needs to be wearing one, even if it is hidden and invisible because you have a mesh avatar, or wear a big furry suit.
Skins in SL can be very expensive. I like LAQ skins, because I don't like the big pouty mouths that many skins have... they look weird with my avatar shape. If you are buying skins from a store in Second Life, be sure to buy the demo skins (most are L$0 or L$1 at most) and try them on. Look at them from every angle and try them in different lighting conditions. Check particularly that you are happy with what the skin does to your face - each avatar is different. The nose area is a particular problem with some skins.
Of course, many skin houses sell a package deal of a skin with a shape, and if you are happy to assume that identity, that may be the best way to ensure they work together. But if, like me, you'd rather not change heads along with your skin and clothing, the alternative to shelling out thousands on a shop-bought skin is to use a free one.
Eloh Eliot made a range of skins available in 2008 and 2009. She also released the PSD files on her website, and they are still available today. If you don't have Photoshop, there are also files that can be used in the free editor, Gimp.
The Eloh Eliot Female skins are on this page.
The Eloh Eliot Male skin is on this page.
Her blog instructions for using the PSD files are here.
Don't get me wrong... you don't have to change the textures to be able to make a usable skin - all you need do is ensure that the right layers are switched on and off in the psd files to make the skin colour you want. There are a lot of things that can be switched on or off, and which you can change in Gimp or Photoshop. You need to be careful that you have the same base colour for all three parts of the skin, head, upper and lower, and you should make a tga or png file with alpha to upload. See Eloh's instructions for more details.
I noticed on her blog that there seemed to have been a problem with selling the skins as freebies on the marketplace, including an imaginary conversation with a Linden. I don't know whether it was that which made her disappear in 2009, but I have been profoundly grateful for her generosity in sharing the files with us all, and would love to be able to tell her so.
Once uploaded, you will need to make a skin by replacing the current textures with your new ones and then saving as "your new skin" or whatever you decide.