When people talk about skin tones, what they're really talking about is skin undertones, aka the color underneath the color. Whether you're porcelain, olive, cocoa or mocha, your skin has an undertone to it, and that undertone is either warm or cool. If you're warm, you'll have slight red, peach or yellow undertones in your skin. If you're cool, you'll have bluish, violet or pink undertones.
How Can You Tell?
To figure out what tone you're sporting, clean off all your makeup and check out your face in natural light. Look hard to spot your undertones. Do you see a little cool blue in there, or do you see warm red or yellow? If you're not sure, try this same trick on your stomach or wrist. Still unsure? Then break out a pile of clothes in different shades. Start with a pink shirt and an orange shirt, and hold each one up to your face. If the pink looks awesome but the orange makes you look cruddy, then you're probably cool toned. If the orange works better, you're probably warm. You can keep on going with this test if you want, trying cool colors like blue-green and pure white and warm colors like yellow-green and ivory white. After a while, you'll start to see that one pile just looks better on you: That's your tone.
What Does It Mean?
Remember that color wheel you learned about back in elementary school? Basically, certain colors are just better friends, while other shades are clashing enemies. If you know your tone, it can help you pick personal colors that complement the colors in your skin rather than sabotaging yourself with a color that makes you look funky and sallow.
Does This Even Matter?
Color theory is plenty cool, but don't worry too much about it. Just because you have cool skin tones doesn't mean you have to throw out your favorite orange sweater or anything. Go rogue and break some color rules if it works for you. Sometimes contrasts absolutely work, so if you're a warm-toned woman who looks killer in cool lavender, go on and wear that purple eye shadow. Just stick with a foundation and concealer that work with your skin tone.