I believe the higher the crafter's skill the more likely the crafter is to succeed in crafting the item. Yes, I do mean actually being successful, as in there is a chance the crafter may fail to produce the item if his skill isn't high enough to reduce the fail rate down to 100%. On top of that, I believe that once a crafter reaches a 100% success rate any additional increase of his/her tradeskill(s) should increase the crafter's chance of producing a high quality item or perhaps (if crafting a consumables) succeed in crafting multiple items. This will incentivize players to level their tradeskill as high as possible as they know they will be at a competitive edge against those who have lower skill.
I realize that in a few MMOs there are actually market advantages at play here. For example, in Eve Online players who have their manufacturing hubs near the Jita space station will have a huge cost advantage to those who are dozens of jumps (or light years) away. The cost advantage in this situation comes in the form of lower transportation costs and as I mentioned before in previous posts, if you can lower production costs you can also lower the sale price. Lowering production costs is another competitive edge that can allow crafters to out compete those who have higher production costs by selling for a lower price.
Like the market advantage the player advantage is also something that few MMOs have established. A player advantage is when two players make a deal on either distribution or materials. For example, a gather could decide to sell his goods to a crafter at 10% below market value if the crafter is willing to buy his stock in large bulks. Of course in this situation both players may see this as a win/win as the gather can quickly sell his large stock and the crafter gets to buy materials for less than market price.
As a result if the game is structured where there are no competitive advantages whether, skill, market, or player, then the crafting skill has little to no value because this means that all crafters of the same tradeskill are literally the same and if all crafters are the same, then the value of crafting becomes non-existent. Crafting is only useful or unique when players are capable of differentiating themselves from the next tradesmen.