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The cheapest thing in the baby aisle is the one that works
Coconut is on half the labels in the store now — the oil, the balm, the diaper cream, the mattress, the yogurt cup. Some of that is real. Some of it is a picture of a coconut on a bottle that is mostly water and fragrance.
Coconut oil is fat pressed from the meat of the coconut. At room temperature it is a soft white solid; at skin temperature it melts. That is the whole trick, and it is a genuinely useful one — it goes on as a solid, so you use less than you would pour, and it turns to liquid the moment it touches a baby.
What it does on skin is what any emollient does. It sits on the surface, slows the water leaving through it, and makes the outer layer feel softer. It is not absorbed into anything, it does not repair anything, and it does not treat any condition. The reason it earns a full guide rather than a sentence is that the baby aisle sells that same function at ten times the price.
Read the skin oil guide