According to Sadie Morgan an article in OhBaby! (some time ago and I forget which issue, but it is online too):
“When a child enters the world, his skin is usually smooth and soft, with an almost velvety texture. For the first week or so your newborn’s skin may feel a little bit greasy as he sheds the vernix that he was covered with at birth. Vernix is a curdlike, waxy, whitish substance that is secreted by the baby’s sebaceous glands while it’s still in the uterus. It may be ugly, but it serves a very important function: To protect the baby’s skin from the amniotic fluid that surrounds it. Without vernix, your baby’s skin would become wrinkled like a raisin – the same thing that happens when you soak in the tub for too long and your fingers and toes start to resemble dried fruit. Research has also suggested that vernix has antibacterial properties and helps protect the baby from infections.
Your newborn baby has spent 40 weeks inside a warm, moist environment perfectly suited to his growth and development, so it’s only natural that when he emerges, some changes need to take place as his body adjusts to the environment of his new habitat. From the time newborns enter the world, their skin is in a state of flux, trying to adjust to atmospheric conditions so different to what they face in the womb. Once the vernix is either shed or absorbed into the skin, your newborn’s silky skin may start to develop some not-so-nice characteristics. Cradle cap, dry and flaky skin, “baby acne”, and other skin-related conditions look awful and can be uncomfortable.
Because infant skin is so changeable, you need to treat it differently to your own, adult skin. Your fantastic anti-ageing moisturiser is deinitely not appropriate for your little one. Infant skin is more vulnerable to irritants, changes in temperature, humidity, and other external factors. It has not yet developed protection against potential irritants like washing powder or scratchy fabric.
So your task as a parent is to treat your infant’s skin gently and mildly.” (p.52)
Ref: Sadie Morgan in search of soft skin OhBaby! pp.52-56 (? I think – I haven’t kept the whole magazine… oops) (also online, though: http://www.ohbaby.co.nz/baby/health-and-wellbeing/baby-skincare-and-conditions/)