Most of the skins you'd ever own are very worthless. Every now and then someone somewhere gets a skin that actually is worth something more than $5. Even more rarely, they'd get a skin that's worth more than $400. The difference here is $400 is the upper limit for which you can sell items on the Steam market, so you wouldn't sell your skin there. Another drawback is you can't exchange Steam money for real money yourself.
Now we have items like Dragon Lore which cost MUCH more and you can't buy them through the market - enter 3rd party sites. People sell and buy skins through third party sites designed for this purpose - much like eBay. You can sell your Dragon Lore for something like 35 AWP Asimovs, at which point if someone agrees, you'd meet on Steam, and begin trading. You'd offer the Dragon Lore, they'd give you 35 Asimovs, hopefully no one gets scammed.
But of curse you don't want 35 Asimovs, you want some $$$
Another option is - you agree to exchange skins for money. He offers you $1000 for the AWP. If it's a friend of yours, you'd most likely agree to send him over the skin, and go collect the money in person. But since the internet is such a lovely place, a much more common practice is for you to receive Case Keys for the amount of money you're supposed to receive. They you'd go on another site and sell your keys for money you'd receive via Paypal or whatever. The trick here is, the key site would make small profit for making this exchange possible. So you started off with a DL worth $1000 and you end up with $980 after selling your keys.
Trust is very important, and people would go over each others Steam accounts to comment, much like eBay, you wouldn't want to trade with someone untrustworthy who'd try to scam you.
