What's the difference between skyrim.ini and skyrimprefs.ini?

Question

I'm trying to improve my Skyrim performance and balance it with graphical quality but I don't know the difference between skyrim.ini and skyrimprefs.ini. When I modify some value in skryimprefs.ini, start, and quit the game I notice slight changes in the file. What is the difference between skryim.ini and skyrimprefs.ini? I get about 20-25 FPS in my game with medium quality settings. I've the ATI 12.1 preview driver installed with ATI Tray Tools and I have about 2 GB VRAM. I believe it's 512 MB physical vram and 1.5 GB shared vram. Overclocking and Overdrive(Powerplay) isn't working on my box because it's a laptop. Here is my Systeminformation with ATT:

ATT Version                   1.7.9.1573
Display adapter               ATI display adapter (0x9591)
Core Name                     M86
SubVendor                     Unknown 1734
SubDevice                     C09D
BUS                           2
Device                        0
Function                      0
Base Address 0                C0000008
Base Address 1                0000AF01
Base Address 2                9FBF0000
Base Address 3                00000000

Bus Type Supported            PCI Express 1.x
PCI-E Link Width              16
Max PCI-E Link Width          16
SMARTGART Installed           No

Driver Version                Unknow
Release Version               8.911.1-111125a-129213E-ATI
QuadBuffer Stereo Support     No
Catalyst Registry Path          
System\CurrentControlSet\Control\Video\{F4527CAB-AC6C-4FAB-AA49-2969AF786E17}\0000 

______________________________
Clock Information             
BIOS VPU                      500,00
Current VPU                   54,84
BIOS MEM                      400,00
Current MEM                   198,00

______________________________
Overdrive                     
Adapter                       0
Supported                     Yes
Type                          PowerPlay
Level 0 : GPU/MEM/VDDC        110,00/400,00/1,100
Level 1 : GPU/MEM/VDDC        300,00/400,00/1,100
Level 2 : GPU/MEM/VDDC        600,00/700,00/1,100

______________________________
Radeon PCI configuration space
00 01 02 03 04 05 06 07 08 09 0A 0B 0C 0D 0E 0F  
00  02 10 91 95 06 04 10 00 00 00 00 03 08 00 80 00 
10  08 00 00 C0 01 AF 00 00 00 00 BF 9F 00 00 00 00 
20  00 00 00 00 00 00 00 00 00 00 00 00 34 17 9D C0 
30  00 00 00 00 50 00 00 00 00 00 00 00 00 01 00 00 
40  00 00 00 00 00 00 00 00 00 00 00 00 34 17 9D C0 
50  01 58 03 06 00 00 00 00 10 A0 12 00 A0 8F 2C 01 
60  10 08 00 00 01 0D 00 00 40 00 01 11 00 00 00 00 
70  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
80  00 00 00 00 00 00 00 00 01 00 01 00 00 00 00 00 
90  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
A0  05 00 81 00 0C 30 E0 FE 00 00 00 00 A0 49 00 00 
B0  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
C0  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
D0  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
E0  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 
F0  00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 

Hardware Information          ASIC (Software) Method
Family                        72
Emulated Revision             81
Gfx Engine ID                 6
VRam Bit Width                128
Installed memory              2171

OverDrive 5 Limits            Adapter 0
Core clocks                   Min 55,00 - Max 600,00
Memory clocks                 Min 200,00 - Max 700,00
VDDC                          Min 1,100v - Max 1,100v
______________________________
FAN                           
1                             0000000C
2                             00006C2F
3                             001E2187
4                             00BF0228
5                             5A50463C
6                             64615F5D
7                             51433628
8                             87796C5E

 Video BIOS Information Adapter0
 Version                       010.088.000.023
 Part Number                   BK-ATI XXXXXXXXXXXXXXXXXXXXXXXXX
 Date                          2008/07/03 23:46
 Vram Type                     HyperMemory
 ______________________________
 Multi VPU Caps                
 ______________________________
 No additional information     
 ______________________________
 Multi VPU State               
 Supported                     No

Answer 1

The two files simply store different things. The Skyrim.ini tends to be a little bit more core to the game - memory tweaks, the uGrids setting, etc - while the SkyrimPrefs.ini is more for things that are actually likely to changed by most users (not directly, but the launcher/in-game settings edit this file so this is basically the preferences store).

In practice, if you have a specific tweak you're trying to implement it will belong in one of the two files, put in the other file it will likely have no or an unexpected effect. Most of the tweaks that are safe and easy belong to SkyrimPrefs.ini.

Also, do note that there are plenty of new items you can add to the two files, so if you're trying to improve performance make sure that you go and look up some tweak guides that will give you these extra items to add. Tweaking what is already in the files won't cover everything.

Oh, and make sure you edit the ones in My Documents\My Games\Skyrim and not those in the game's install directories.