Its additional context that can be loaded by the agent as-needed. Generally it decides to load based on the skill's description, or you can tell it to load a specific skill if you want to.

So for your example, yes you might tell the agent "write a fantasy story" and you might have a "storytelling skill" that explains things like charater arcs, tropes, etc. You might have a separate "fiction writing" skill that defines writing styles, editing, consistency, etc.

All of this stuff is just 'prompt management' tooling though and isn't super commplicated. You could just paste the skill content into your context and go from there, this just provides a standardized spec for how to structure these on-demand context blocks.