Now, do not confuse the two. Hydration means water and moisturization means oil. A healthy balance of the above two is the key to that perfect skin and solving all the skin issues which plague you. So, let us look at both of the terms with respect to their skin conditions a little closely.
Dry skin can be dry for two reasons - it lacks water or the hydration levels of the skin is too less because of the less water consumption by the person, if we cancel out all other factors which lead to dry skin and assume that the person is following healthy skin habits. Also, there is a decrease in the natural skin oils or lipids which create a protective layer over the skin and help keep it moisturized.
So, to counter dry skin, apply both oil and water based moisturizers or you can use different moisturizers having water and oil and layer them. That it what I do. I use aloevera gel first and follow up with a facial oil. Doing just either of these steps will make the skin feel stretchy. Also, a tip is to apply the moisturizers and oils on damp skin.
Where as on oily skin, there is already ample of oil but what it really lacks is hydration. Even oily skin can get dehydrated and this dehydration sends mixed signals to the brain which in turn causes skin to produce more oil to counter the missing water from the skin. Result - even more oily skin but no hydration. So, to counter oily skin, apply water-based moisturizers regularly. Facial oils can also be applied like grapeseed.
So, do you think your skin is dry or dehydrated? Does it need more water or oil?
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