Skills are important to the game, obviously, for if you don't have the appropriate skill, you usually can't do it. Want to cast a healing spell? You better know Body Magic. Want to repair stuff? You need the Repair Item skill. And so on.
There are two types of skill levels: Skill and Expertise. Skill is the numerical part of the skill level: it defines the extent of any bonuses that you recieve. Expertise is the "Normal", "Expert", "Master", and "Grandmaster" part of the skill level. It defines what sort of bonuses you receive.
To put it as an analogy, take the Unarmed skill: At Normal level you basically know how to punch and kick where it hurts. You can get very good at this, and get a 10 in Unarmed (enough to be a Grandmaster). However, you really only know how to punch and kick very well. Meanwhile, Grandmasters can pull off more complex and damaging moves such as aerial spins and full nelsons, and use them effectively.
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