See the Skills Table.
Skills are gradually honed abilities. Most tasks characters undertake are resolved by applying either skills or attributes. Both work the same way.
Skill Level. A character's degree of training in a skill is represented by his/her skill level.
E.g. a character with a skill level of 8 in athletics is has more training in that skill than a character with skill level 5.
Improving Skill Level. When a character first acquires a skill, he/she gets it at "level 0". Characters can improve skill levels during the creation process by spending GPs, and afterwards by spending EPs.
Maximum Skill Level. The maximum skill level a character can obtain in a skill is equal to the highest attribute (or skill level) the character has which appears in the skill's formula multiplied by the skill's limit.
E.g. a character with a trained AG (agility) of 11 has a maximum skill level of 17 in acrobatics. AG is the only attribute in the formula (AG/2) for acrobatics, which has a limit of 1.5; 1.5 x 11 = 16.5, which rounds off to 17.
A character with an AP (appearance) of 11 and charisma level of 9 has a maximum skill level of 11 in seduction. Seduction's formula contains both AP and Cha (charisma level) and its limit is 1.
Skill PCS (Primary Chance of Success). PCS represents how good a character actually is at a skill. You calculate PCS by adding the formula for the skill to the character's level.
If the sum of formula and level exceeds 20, then the PCS is left as 20 but for each three full points by which the sum exceeds 20 the character receives a +1 bonus modifier to all tasks performed with the skill. Such a skill is written as "20+1" or whatever the bonus is.
Formula + Level
The same (0..20)
Formula helps determine how good a character will be at a skill (since it contributes to PCS) and how good a character can get at it (since the maximum level is limited by the highest attribute or skill level the character has that appears in the skill's formula).
Exp (experience) determines how hard it is (i.e. how much it costs, in terms of GPs and EPs) to learn the skill and improve its level).
BEF (base ease factor) determines how easy the skill is to use in a typical situation. Often, one or more modifiers will be applied to BEF to determine the actual difficulty of a task. See Resolution.
Limit helps determine how good a character can get at skill (since it is multiplied by the character's best related attribute or skill level to determine maximum level).
TL (tech level) represents the level of technology required before the skill becomes available.