Yes.  You constantly lose small amounts of moisture through your skin
(not just via sweat glands).  If you coat your skin with grease, this
loss is blocked, and the outer, normally dry, layers of your epidermis
become moister and softer until it wears off or washes off and your
skin dries out to its normal consistency.

Note that your skin normally produces a small amount of oil for just
this purpose, but when you wash with soap, you remove it, and your skin
will be drier and may even get raw or chapped.  People who have to wash
their hands a lot often find hand lotions very helpful.

As for the stratospheric prices, these people are selling the hope of
beauty or youthfulness or similar pitches common in the cosmetic
industry.  They often have magical ingredients (royal jelly, vitamin E,
herbs, herbal oils, etc.) in minute amounts, but impressively pitched
on the label.  Note that cosmetics aren't drugs, so the the ingredients
need only be safe, not effective.

If you just want to counteract dry skin, you can use animal fat or
vegetable oil or petroleum jelly (Vaseline) or similar.  Animal fat has
the weight of many millennia of tradition, which still persists.
Recently I've seen emu oil sold for this purpose, but somehow I don't
expect to see the comparable but far less exotic sounding goose grease
or chicken fat.  Rejuvenate Your Skin with the Miracle of Schmaltz.
Reverse Aging with the Secret of the Ages -- Pure Refined Lard.

The advantage of the lotions is that they are usually compounded to
leave a less greasy feeling residue and not stain clothing.  You can
find cheap and effective brands of hand lotion.  If you look hard
enough you might be able to find some that lack those revolting scents
common to both cheap and expensive types, but tastes differ.  Or you
can rub a few drops of cooking oil into your hands.

Yes, there is.

If you want to use one of these moisturiser, then plain old aqueous cream,
or a slightly richer Emulsifying ointment will do just the job, and cost
about ?2.50 for a big 500ml tub, avaliable at any Pharmacy

Hayley