|Shelia the Thief|
It has always seemed so obvious, it never occurred to me that someone might not know.
Character skill is how well your avatar within the game accomplishes task.
Player skill is your ability as a player to make intelligent tactical and strategic decisions that lead to accomplishing your in-game goals.
It's true of any game, except in most games there isn't character skill. Many modern games contain the ability to manipulate an avatar. This is a feature exclusive to modern games, unless one wants to make an argument that the way a rook moves is an example of character skill.
It is more than knowing the rules. You can memorize the odds in poker, but that won't make you a good poker player. This is why 'how well you build your character' isn't really a measure of player skill. In an RPG it is no more skill related than selecting hard or easy mode in a video game.
Tactical decisions are specific logistical implementations in order to maximize efficiency. Strategic decisions are long term choices about resource allocation to accomplish goals.
In a type IV game, this means working as a team to maximize your damage and minimize your resource expenditure — it also means not engaging a trivial fight when there is a more important objective.
In a OSR game, this means thinking about the situation your character is in, being observant and making decisions to engage in situations that minimize risk.
For information on why player skill isn't pixel bitching or playing guess what the DM is thinking, this post elaborates. For information on agency and empowering players in general, read posts under this tag, or start here to learn about the quantum ogre.