The location that you run the command from is very important. By default, when you open a terminal, your shell will be in your home directory (/home/username). You need to "cd" (change directory) to the folder where the tar file is before running "tar -xjf skippy-0.5.0.tar.bz2".
This will extract the content of the archive to your Downloads folder.
tar -xjf skippy-0.5.0.tar.bz2
Alternatively, you can state the file's location relative to your shell's current location, like you did in your second command. Assuming you haven't used "cd" to move away from your home directory, this will work:
and will extract the content of the archive to your home folder. Using an absolute path will have the same effect:
tar -xjf Downloads/skippy-0.5.0.tar.bz2
Despite the terminal not displaying any output, the archive is being extracted. If you want to see that something is happening, add the -v flag to the tar command:
tar -xjf /home/username/Downloads/skippy-0.5.0.tar.bz2
That will make the command verbose, and all the files affected by the command will be listed in the terminal.
tar -xvjf /home/username/Downloads/skippy-0.5.0.tar.bz2