Because moisturizers are oil-based, they not only better hydrate the skin but help protect it. Kenneth Mark, MD, a board-certified dermatologist and Mohs skin cancer surgeon, tells Real Simple that moisturizers "have the greatest emollient effect", meaning they increase moisture levels in the skin. "They also can create a barrier between the skin and the environment to help seal moisture into the skin," he explains.
The nourishing properties and thick consistency of moisturizers make it much more effective at hydrating the skin while being less likely to irritate it. Lotions, on the other hand, may offer temporary hydration but won't do much to protect the skin over time. Because of this, moisturizers are usually a better option than lotions when treating dry, dehydrated skin. However, Dr. Mark adds that lotions might be more beneficial when moisturizing hairy parts of the body, as they are thinner and therefore easier to rub in.
Lotions can also come in handy if you have oily, acne-prone skin or are in warmer climates. According to Dermstore, "Water-like textures are best for humid areas so as to not clog pores and prevent your makeup from slipping and sliding in the heat."
Essentially, both lotions and moisturizers have their benefits, but if you're looking for long-term hydration, oil-based moisturizers are the way to go.