Hi,
sst_skin calculates the very top layer of the ocean that fluctuates with the diurnal cycle. sst_update updates the SST temperatures, which is about 10 meters in depth, and can take many days to fluctuate. Most people who do long simulations want to use both, as they can both impact the results. SST data should be input through the WPS process, and then following calculations new values will also be output. sst_skin will update and output an SSTSK variable.