Obviously this won’t work for all sports, but things like football, track, soccer, it would allow for de-gendered team, even allowing athletes with the skills but not the genetically-endowed physical attributes to have a place to play.
Note: I know very little about sports and being on a sports team, so please point out anything that doesn’t make sense.
I think it’s clear that in this context, “skill” is being used to mean “achievement.”