Occlusives are the least glamorous and most effective category in skincare, and this is the standard.
Petrolatum blocks water from leaving your skin. It reduces water loss by more than 98% — no other ingredient comes close. That is the whole mechanism, it is well established, and it is why this works.
Unlike plain Vaseline, Aquaphor is semi-occlusive. At 41% petrolatum rather than 100%, it lets a little water vapor through. That is why it is preferred over pure petrolatum jelly for healing wounds and post-procedure skin — the skin underneath is not completely sealed.
It contains glycerin and panthenol, which pure petroleum jelly does not, so it hydrates as well as seals.
Cheap, and a tub lasts a very long time.