Ideally, a wetsuit should touch you everywhere without stretching too much. Fighting to get the suit to stretch wastes energy, and stretched neoprene is thinner. Neoprene is waterproof. Water can't penetrate the fabric to your skin. When this thin, neoprene is very stretchy, so it hugs your body without the wrinkles and bags that would pump water in and out whenever you move.
Less flow means less heat loss.
Water flow over bare skin is usually a diver's biggest source of heat loss in warm water. Neoprene skins dry at least as fast as fleece suits and cost, on average, about half as much as fleece suits. Traditionally, hooded vests have been worn inside the wetsuit, against the skin. That gives the sensation, at least, of improving the neck seal, because incoming water doesn't touch the skin until it reaches the bottom of the vest. But modern wetsuits have much better neck seals, which are designed to mate to skin, not nylon.