Stencils can be used in a number of ways and with a variety of toppings. You can decorate plain flat cookies or cookies coated with smooth, dry Royal icing or fondant.
Food Coloring Gel
One way to stencil is to use food coloring gel and a flat Stencil Brush. Dab brush in a small amount of food color, wipe and pounce on a paper towel until you have the right consistency. Place stencil on top of cookie, then apply coloring to stencil by pouncing or swirling the stencil brush. This takes a little practice, so try your first attempts on paper. This dry brush technique will prevent the color from running under the stencil and give the pattern crisp edges.
You can stencil with Royal icing. If the icing is too thin it will run under the stencil and if it is too thick, it will be difficult to work with. Always try a sample on parchment or a paper towel to make sure you have the right consistency. Use a spatula or flat trowel to smooth icing over stencil, then lift stencil straight up to remove. This technique gives a raised, embossed look.
If desired, you can sprinkle the wet icing with colored sugars, disco, luster, or platinum dust, cocoa, ground nuts, spices, etc.
Scrape a few little shavings of cocoa butter into a tiny warmed cup. Dab stencil brush in melted warm cocoa butter and wipe off excess on a paper towel. Lay stencil over cookie, then pounce/dab stencil brush on top of stencil design. This method works great on detailed stencils and is great for chocolates or cookies decorated with dried royal icing.
View videos showing culinary stencil techniques: here.