'Skin of Evil' is of course most memorable for the shock death of Tasha Yar, who barely survived a season on TNG. I'm not exactly sure of the reasons behind Crosby's departure, although I am quite sure she later regretted not having stuck it out longer. If her decision to leave was based on the quality of the first season scripts then she had valid reason to want out, but patience is a virtue and even by this point TNG was starting to show signs that far better things lay ahead.
Anyway, I was genuinely upset when this originally aired in the UK. I think I was about 11 or 12, back in 1991 if I recall, and I bawled my little eyes out. Tasha's death was unexpected and quite arbitrary seeming. Like many others who were uniformed, I expected them to find a way to resusitate her by the end of the episode - so it wasn't until the funeral scene that it truly sunk in that she was gone for good. A shame - cos I kind of liked her and I can't help but wonder how the character might have developed as the series progressed had she stayed.
The episode itself is quite effective: Armus is one of the show's most memorable villains and one who is truly beyond all hope of redemption. The tragedy of his creation is neatly conveyed and his sadism makes for grimly compelling viewing. Alas, the episode is a little uneven: I think it would have been more effective had Tasha been killed nearer the end of the episode, because as it stands, the first quarter of the episode contains all the fireworks...and the rest is a little plodding and talky by comparison.
Still, it's nevertheless one of the season's more effective - and clearly shocking - episodes. The funeral scene is perhaps a little manipulative but it is nevertheless a tearjerker of the first degree.
Au revoir Natasha.