Dry skin develops when the sebaceous glands that produce the natural oils in our skin are underactive. It is hereditary (same as oily skin) and it can also develop as we get older when the glands´ activity slows down.
This skin type tends to be dehydrated too (to find out the difference between dry and dehydrated click here). The oils in our skin help to retain moisture, therefore if there is little oil moisture diminishes too.
Oil also helps to retain cells in the superficial layer of the skin. As a result of lack of oil, dry skin fas fewer cells and makes it more prone to sensitivity and having a fine/delicate appearance. Other characteristics are that pores are almost invisible, the skin wrinkles more easily and it tends to have a lot of very fine superficial lines.
It needs very gentle exfoliation, rehydration and keeping moisture and oil levels. Gentle cleansing with a cleansing cream or milk followed by a gentle toner, a good moisturising cream (with SPF for the day) and moisturising non-setting masks a couple of times a week will also help it.