Moisturizers have two basic types of ingredients, most often used in combination:
Occlusives, such as petroleum jelly and oils, coat and protect the skin (acting as emollients), thus slowing moisture loss.
Humectants, such as glycerine, attract moisture and temporarily hold it against the skin. (Glycerine can, however, sometimes remove moisture from the skin.)
Products made for "dry skin" usually contain more oil and leave slightly more residue on the skin.
You may think (logically enough) that skin absorbs moisture or oil from a moisturizer. But it doesnt work that way. The skin absorbs little from a moisturizer. The moisturizing effect comes from the protective factor (usually some form of petroleum jelly or oil) and from the humectant. Thus, the product keeps your skins own moisture from evaporating. Whatever the ads may claim, expensive products work in exactly the same way as inexpensive ones. You may like the smell or texture of a costly product, of course. Packaging is also a big selling point, but has nothing to do with product performance.
Sorting out special ingredients
Liposomes: These tiny particles of fat in many moisturizers supposedly penetrate the skin, replacing your own lost oils (liposomes occur naturally in the skin as well). This is undoubtedly wishful thinking, though cosmetic companies claim they have proof. You dont need to pay extra for products with liposomes.
Vitamin E, hormones, and other "skin foods": No ingredient "nourishes" your skin, contrary to what the ads claim. Your skin gets its nourishment from what you eat. Vitamin E comes as an oil, and thus can act as a moisturizer, like any oil. It is true that vitamin E (and C) can be absorbed by the skin and may offer some antioxidant protection against sun damage, but it is unlikely to be protective in the low concentrations used in moisturizers.
Collagen and elastin: These proteins keep skin looking young. Your body has to produce themit wont help to rub them on, because the molecules are too large to penetrate the skin.
Sunscreen: Many moisturizers now contain sunscreen. Though these products offer some protection, don't use them as substitutes for a real sunscreen.
"Anti-aging creams": These usually contain some or all of the ingredients listed above, among others. But no cream will make you look 39 when you're 69.