Keratin is one of the many proteins found in our body's system. It is important for the health of our hair, teeth, nails and the skin. To make understanding it a little bit easier, just imagine keratin as a kind of string holding your cells together. These strings or filaments anchor your cells to each other making them stronger.
For skin in particular this is what ultimately forms the epidermis that tougher outer layer that protects us from environmental elements. Firstly epithelial cells are anchored to each other by proteins called desmosomes. The epithelial cells are arranged closely together and attached to each other via the desmosomes (acting like a glue). But it's keratin fibers inside that hold the desmosomes to the cells.
Then there is a process known as cornification which is what creates that outer layer. This is where keratinocytes in the mid layers of the epithelium produce ever more keratin and start to move up towards the top level of the epithelium. The keratinocytes die off gradually and a shell of keratin fibers is left behind. This is effectively the 'dead skin' that protects the living skin beneath. It's also what flakes off in a constant process of renewal.
Neeedless to say diet is important in the formulation of keratin. Gelatin food products are known for aiding the increase of keratin secretion in our body and consequently leading to healthier skin, hair and nails.
Hair also requires keratin of course. This is because the hair is susceptible to many destructive habits. Each time you curl or straighten your hair the keratin natural stratum is destroyed. The continuation of such activities leads to your hair becoming frailer, and it starts to break. Which is why a lot of 'professional' hair care products contain refer to proteins or keratin.