Assuming this is true since both partners are regarding it as a new "Private Conversations" feature instead of giving complete blanket coverage. In conjunction with Signal, the new encryption feature will make private conversation between users secure. From the chat window, only emoticons, files and audio messages are available to send. So, Skype will use industry standard Signal Protocol from Open Whisper Systems for end-to-end encryption. You can tell the Skype chat is private by a lock icon next to the contact's name (shown on the right). Signal Protocol powers end-to-end encryption in Facebook-owned WhatsApp and Messenger, as well as Google Allo.
Many common Skype activities expose data that is not encrypted at various points between two users. Those encrypted messages can only be read by people involved in the communication. Seeing as it is in beta today, this may become a reality but Microsoft has yet to acknowledge if they will go down this path. If you are a Skype Insider, you should be able to try the feature out now with Skype version 22.214.171.124 for iOS, Android, Linux, Mac, and Windows Desktop.
To start a private conversation, you need to tap on + icon and select "New Private Conversation". You can only participate in a private conversation from a single device at a time.
Several popular services have added encrypted messaging for their products, such as WhatsApp and Facebook Messenger, while other apps like Threema specialize in it. Skype, despite its popularity, has been slow to offer its users this option. It only works with one-to-one chats at this stage - so video calls and group chats remain unencrypted. But this isn't the same as end-to-end encryption.
All of this should serve as a lesson for Skype as it rolls out end-to-end encryption: nothing is ever truly impenetrable. What would happen if you forget to enter "Private Conversations"?
Once upon a time, Skype's distributed peer-to-peer communications was considered pretty good for privacy.