Using the New Copilot Studio Skills

One thing Microsoft is not good at is naming things, and sadly it's happened again. But let's go back to the beginning: what are Skills? Skills are targeted prompts/context that are modular, so they are not always included in the LLM session. They are Markdown files with selected metadata in YAML, all in a file normally named skill.md (the parent folder and YAML metadata identify it). They were created by Anthropic (Claude) and were designed for both the user to add in a prompt ( /Skill ), or for the LLM to decide. Similar to Skills are Plug-ins. These can (and often do) include skill.md files, but can also have scripts, MCP servers, and other tools. So back to Microsoft naming things badly. Copilot Studio (Azure Bot Framework version) had skills, but they were not skills. The new Copilot Studio has Skills, but they are not Skills, they are actually Plug-ins. Plug-ins include Skills, so why does it matter? Well, it doesn't really, but I like to moan, and it means sometimes cool functionality can be left on the table because we presume Microsoft names things accurately. Anyway I digress (I like to do that), now we understand what Skills/Plug-ins are I wanted to dive into them within Copilot Studio and cover: Why Are They Cool Building Powerful Skills Adding Scripts/Templates Using Skills 1. Why Are They Cool I often go on about skills being cool, but why? There are a few reasons. Context Management Before skills, the standard approach was to give the LLM everything and let it figure out what it needed. The problem with this is twofold. First, more context equals more tokens, which equals more cost. Second—and more importantly—too much unrelated context can have a detrimental impact on the LLM response. LLMs work by using input tokens to predict the next token, so polluted input tokens can make the LLM predict the wrong next token (this is a huge simplification, but you get what I mean). Transferable As skills are simple Markdown files, they can easily be transferred