This is what a "native" skin would look like.
In game development terms it is called a texture map, and it is wrapped around the 3D model in order to produce a livery.
As this is developed in-house it can be compressed and optimised in a lossless fashion, and is saved on the hard drive/disc of every copy of the game.
This cannot be changed without issuing a patch that affects all users.
For the user-created version of the livery editor, we are given a simplified version where a texture map has been split up into separate paintable areas that we can place shapes on top of.
While this version is potentially saved locally, the file size needs to be kept to a minimum as {a} it can be edited at any time and {b} will be uploaded and downloaded several times as it can be accessed from the Storefront and in races. I wouldn't be surprised if it's saved on the Forza servers and our local copies are essentially backups. In that case the Forza servers need to be capable of storing up to a billion potential livery designs, as each of the 3 million + players that will play can theoretically upload 300+ designs.
TLDR:
- Native liveries are static images, saved as part of the game's texture data, and can be saved at a higher quality.
- User-created liveries are dynamic and stored on the Forza servers, and need to be compressed for many different reasons.