DNN uses an ascx file to skin the application.  You can make a skin.ascx file yourself.  Thanks to DNN's built-in parsing engine, however, you can also make a skin using html and embedding "tokens" to designate where the skin objects (login, menu, etc.)  are located.  However, when using html the designer has to make up an accompanying .xml file to tell the parsing engine which parameters (css classes, menu alignment, login text, etc.) to mesh with the html in order to make the skin .ascx file.

So, no matter how you get there, DNN uses an ascx file (along with css and any images) to skin the portal application.

Hope this helps.