Thats more something general for file formats, and an explanation of the DDS and DXT functions. Not so much related to skinning.
For rfactor2, the DDS settings are:
Skin: DXT5 interlaced, including mipmaps
Windows (Not tried yet): DXT5 including mipmaps (will try this later on)
Mini Icon and Large Icon: NO!!! DXT,DDS settings 8.8.8.8 (Only possible with Photoshop plugin, does not work with DDS Convertor)
I shall make some kind of instruction / download post somewhere this week, with all relevand downloads as well. There are some template files which are hard to find, and I made some templates myself as well.