Raju,
Skins are created as either HTML, CSS and XML or .ascx and CSS files. If you're creating an HTML, CSS and XML version; these are converted to .ascx files when the skin pack is uploaded and parsed by the DNN framework.
When it comes to creating a new skin, pretty much any design will convert to a skin pack. I think the main concept to keep in mind is that a DNN skin is the bare framework for any DNN site. It contains all the generic layout elements, and DNN functionality such as where the navigation will be placed, and how it will be styled, how many panes there are, where banners are to be shown etc, and it is also the main source for CSS styling, where you control the sizes of fonts, titles and the colour/style of links.
There are a wide selection of sources for learning how to create skins including:
There's quite a lot to creating a skin from scratch, and if you're starting out with DNN skinning it's a good idea to download one of the free skins available and see how they've been created.
I find a good starting point, when creating skins from scratch is to build the design into a valid XHTML and CSS layout, which you can then strip down (removing the navigation, content, breadcrumb element etc) and insert and style the relevant DNN tokens. From this you can progress with XML and further CSS to create a working DNN skin pack. You'll find that a lot of it is trial and error, especially as you get used to the skinning engine.
Once you have your skin pack, these can be uploaded as skin uploads in DNN4 and extensions in DNN5.
I hope the above info is a good starting point for you.
Regards,
Rick.