A recent episode of the American Chemical Society series Reactions excellently explains the three ways (occlusive, humectant, emollient) by which moisturizers work to effectively repair dry skin.
Occlusives are the old school moisturizers and they work in the simplest way possible. They form a barrier over the skin that water can’t penetrate, stopping evaporation and keeping your skin moist. …more popular these days are the emollients. Instead of coating the skin, these are designed to penetrate, making your skin feel softer and more flexible. …the third kind of moisturizers are called humectants. Broadly, these kind of molecules help attract and retain moisture in the epidermis. Humectants get the younger, moist cells to the outer layers of the skin as well as reduce the flakiness of dry skin.