Yes, it's the thing that can be found naturally in pee. But it is also a natural moisturizing factor (about 7% of skin NMF is urea) found in our skin cells where it helps the skin to cling onto water and stay nicely hydrated.
Don't worry, the urea version used in skincare is not extracted from pee, but it is synthetic and it's a very effective moisturizer. Plus, unlike a bunch of other water-binding ingredients, it is also nice to use as it's non-tacky and non-greasy.
- Lodén, Marie. "Role of topical emollients and moisturizers in the treatment of dry skin barrier disorders." American journal of clinical dermatology 4.11 (2003): 771-788.