What Gives Skin Its Colour?

Melanin is responsible for giving skin its colour. The majority of skin cells are busy replacing the epidermis, but approximately 5% are making the brown/yellow pigment melanin. It is produced by melanocytes in the epidermis. The amount of pigment you have in your skin depends on the amount your parents had. Pigments get passed on from generation to generation. People with darker skin express the melanin-producing genes more frequently than lighter-skinned people.
Albinism is defined by having little or no melanin in the body. People that suffer from this condition have extremely pale skin, light hair and eyes. Melanin effects the colour of hair and the iris of the eyes, so they are affected as well.  
When you go out into the sun, more melanin cells are produced to help protect the body from harsh UV rays. As more and more melanin is expressed, the skin becomes darker. That is why skin gets darker as you spend more time in the sun. The tan fades because new skin cells are produced which haven't been as exposed to the sun.