Dry skin very commonly produces itching, which can be severe and interfere with sleep and other daily activities. Repeated rubbing and scratching can produce areas of thickened, rough skin (lichenification). Dry, thickened skin can crack, especially in areas subject to chronic trauma (e.g., hands and feet), causing painful cracks in the skin (fissures). Dry skin and scratching may result in a dermatitis when the skin becomes red (inflamed) in addition to dry and scaly. Round, scaly, itchy, red patches scattered over the legs, arms and trunk (nummular eczema) may also appear. The appearance of yellow crusts or pus in these areas indicates that a bacterial infection is developing. This would require specific antibiotic therapy from your dermatologist or family physician.
If your skin is very dry, or if you have an associated red dermatitis, it is a good idea to seek the advice of your dermatologist or family physician. Severe dry skin is a feature of certain genetic diseases such as atopic dermatitis and ichthyosis (fish scale-like skin). In addition, people with hormone imbalances such as underactivity of the thyroid gland can also experience severe skin dryness (there are other changes in the body that accompany dry skin in this setting that helps doctors recognize this problem). On occasion red, dry skin rashes can be confused with other skin problems such as a ringworm infection or allergic contact dermatitis (i.e., a poison ivy-like skin rash), which would need different forms of treatment.
Source: uihealthcare.com