What should we do for slight discoloration on my daughter's arm and legs? Legs also have some rashes that cause itchiness and flare up after swimming.

Eczema. You need to use a moisturizer on her skin twice to three times a day. Moisturizer means either lotion, cream or ointment. Choose one without fragrance or added color. Itching will respond to Hydrocortisone 1% cream 2-3 times a day on those itchy areas. Too frequent bathing or swimming will make the dry skin worse.