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I was reading the DMG (p 72 to be specific), and I noticed that "haggling with a merchant" is just a simple Diplomacy check and not a complete skill challenge. How does a "skill check" differ from a "skill challenge?"
Please provide an example of each to clarify.
You've got two different mechanics going here.
Skill Checks. These are a one off thing. You set the DC for the check and the PC rolls against it. If they succeed they accomplish what they wanted to do. If they fail than they don't get what they want and something bad may or may not happen.
Skill Challenges. These are an encounter based on skill checks rather than combat. You have a goal and based on the terms of the challenge you have a set of skills that can net you successes (primary skills), failures and some checks that may boost other checks (secondary skills).
As an example, if your PC merely wants to haggle over the price of an item, this is probably a good time for a Diplomacy check, they can persuade the merchant that their item should be worth more for a specific reason. If true then a Diplomacy check is called for, if false a bluff check is more appropriate.
However, if the adventurers would like to achieve something more complex, like perhaps a permanent discount at a shop, this would perhaps require a skill challenge that involves diplomacy, athletics, bluff and another skill or two. The adventurers might promise protection, special access to items from their adventures, right of first refusal etc. (make a note of what's promised). Success may net them a permanent discount on purchases or a premium on sales at that shop. This is a bit trivial but used as an example.
Lastly, a small piece of advice. Make failure interesting. What happens if your PCs fail? If failure is not interesting then there is no point in making the check/performing the challenge/fighting the battle. Failure should always have an interesting consequence and contribute to the overall plot. Have a direction in mind should your PCs fail. Remember that the game is an exercise in cooperative storytelling and that PC failure is part of the narrative conflict of the story.
