While that's the general story, it leaves out most of what's unusual about the two small societies, each with a population of around one hundred. As suggested by their name, the Flatheads actually have flat heads, and live on one of the infamous Ozian mountains with steep sides and a flat top. Access to other lands is accomplished by means of a staircase in the middle of the mountain. Because of their unusual heads, the Flatheads had no room for brains, so the Fairy Queen Lurline gave them canned brains that served them well enough. Once the Su-dic took power, however, he and his wife Rora began stealing brains from their enemies, giving them the extra knowledge they needed to become accomplished magicians. Coo-ee-oh removed Rora's skill in witchcraft by turning her into a golden pig, but not before she had mixed up some fish poison that apparently had additional magical properties. After ending the war, Glinda rounds out the heads of the Flatheads and places the brains inside, hence preventing any more mind-stealing. As for the Skeezers, the Queen used what she'd learned from the Adepts to make the island into a marvel of mixed mechanics and magic. Her power to expand and contract iron enabled her to submerge the entire island and restore it to the surface at will. She also constructed what might well have been the first submarines in the Land of Oz. The primitive science fiction effect of the island is augmented by the palace guards being "armed with queer weapons that seemed about half-way between pistols and guns, but were like neither," but they never have any occasion to use them during the story.
The term "Flathead" was used to refer to the Salish tribe, which was native to Montana. The rather derogatory-sounding name apparently came from the fact that, unlike their neighbors, the Salish did not practice vertical head-binding. I think it's likely that Baum just took this name and made it literal for Oz. "Skeezer" was probably just nonsense, although the term has since come to refer to crack whores, or loose women in general. I assume this doesn't have anything to do with Coo-ee-oh's reputation, but who knows? :P It might also relate to "skeezicks," an American slang term for "rascal" or "rogue" dating back to the mid-nineteenth century, as well as the name of a creepy crow-like creature from the Uncle Wiggily series (whom I remember from the Uncle Wiggily board game that I used to play a lot as a kid). There's also a character named Skeezix in the comic strip Gasoline Alley, but he wasn't introduced until a few years after Baum's death (although the strip itself did exist while Baum was still alive).