I had found a book (called "The Book of Dreams") that was covered in human skin. I used Identify but it didn't work.
Can an item resist this spell?
The book is magical. The DM said Identify did not work on the book. Can the DM choose to make the spell not work?
The variant rule in p. 136 of the DMG says this:
consider removing the ability to identify the properties of a magic item during a short rest, and require the identify spell, experimentation, or both to reveal what an item does.
Beyond that, the DM is Master of Rules in his game world. (DMG p. 5) There's an extended treatment of how a DM deals with identify as a spoiler in this Q&A.
This is likely a home brewed item, and may have additional protection against divination spells on it, such as nondetection.
For the Duration, you hide a target that you touch from Divination magic. The target can be a willing creature or a place or an object no larger than 10 feet in any dimension. The target can’t be targeted by any divination magic or perceived through magical Scrying sensors.
While that spell lasts normally only 8 hours, there is nothing stopping the DM from applying that spell to it permanently. Alternately, this book may be a sentient magic item (DMG p. 214-218) that casts nondetection on itself when it is handled, or as a reaction to divination magic.
Given the clear explanations in identify's spell description on what "should happen" you are correct - there is something unique or non-standard about this item. What to do?
If you have not already done so, cast detect magic on the item to
see what school of magic is the enchantment on it.
(A nondetection spell should give off an abjuration aura, though @Ruse points out that nondetection would in theory block that spell as well. The fact that detect magic doesn't work could tell you that something like nondetection is protecting this item).
Discuss with your DM the making of a Intelligence(History) and or an Intelligence(Arcana) check to see if there is lore or history on that tome that you may have been taught earlier in your character's life.
As to experimentation with a book: you may need to read the title page, or something like that, and risk "something happening" to get an idea of what the book does. It looks like your DM is taking an old school approach to making item identification more challenging.
You can try to use dispel magic to remove a spell effect like nondetection.
Choose one creature, object, or magical effect within range. Any spell of 3rd level or lower on the target ends.
If that works, great. If not, the DM may have set it up differently, and you may need something like legend lore (5th level spell) to gain more information about the item.
If the DM does that all the time, that's one thing.
If this is an exceptional case, this blocking of identify is a sign to you that you are dealing with a very unusual item, perhaps an artifact.
Proceed with caution.
There are a variety of blessings (DMG p. 228) that can be bestowed on a PC. A blessing of 'non detection' applied to this item (rather than on a PC) isn't too far of a reach. Homebrewing magical items is as much art as science, and well within the DM's purview.
As Alk pointed out, if someone cast Nystul's Magic Aura on the item for 30 straight days, identify or detect magic can return the result of "not magical" due to how that spell works.
Firstly, there are methods in the rules available to players to prevent Identify from being effective. For instance, the third-level spell Nondetection states:
The target can't be targeted by any divination magic or perceived through magical scrying sensors.
As Identify is a divination spell, it would be prevented from targeting an object which is the subject of a Nondetection effect.
However, it also the DM's prerogative to decide that, in their world, the Identify spell is not always going to be useful. Though in the normal rules there's nothing that Identify can't, well, identify, the DM might decide that some items - perhaps extremely powerful, ancient, or otherwise unique objects - are simply not able to be trivially examined by such relatively low magic.
Using the Identify spell as written can make it difficult for DMs to write plots which depend on magical items having unknown or mysterious properties, which is a pretty common trope in fantasy, so I don't think it's terribly unusual to sometimes decide that Identify doesn't work on everything. I'm personally planning a game where I don't intend to allow any of the normal methods for trivially identifying magical objects (using Identify or having a nap while you think about it), because I want the mystery of figuring out the workings of the ancient magical items the party finds to be an important part of the game, not merely a brief inconvenience until they have a moment's downtime.
Nystul’s Magic Aura (phb pg. 263)
“You place an illusion on a creature or an object you touch so that divination spells reveal false information about it.”
The spell can make a magical object appear nonmagical. Also after 30 days of casting the spell it becomes permanent until dispelled.
There is nothing in the spell text for identify that allows an item to not be identified:
You choose one object that you must touch throughout the casting of the spell. If it is a magic item or some other magic-imbued object, you learn its properties and how to use them, whether it requires attunement to use, and how many charges it has, if any. You learn whether any spells are affecting the item and what they are. If the item was created by a spell, you learn which spell created it.
The catch is that it only works on magical items. If the book you found isn't magical (try detect magic to be sure) then identify won't work.
