As with humans the skin communicates sensations such as pain, heat, cold, touch, etc. to the brain. An animals skin also processes vitamin D just as we do. When we take our pet to the veterinarian, one of the usual examinations done is one of the skin. Dry skin and fur can indicate illness. Yellow skin can indicate jaundice and blue skin can indicate heart problems.
Rashes can mean allergies.
Dogs can have seasonal and environmental allergies as well as food allergies. Food allergies may not always be associated with new foods but can also come from foods they have eaten for years and have become sensitive to due to many reasons. Your veterinarian will recommend ways to test your dogs diet and recommend a course of treatment. Many dogs such as spaniels have seasonal and environmental allergies which can manifest themselves not only with sneezing and watery eyes, but also with skin rashes. Allergies to fleas and medicines can also cause skin rashes.