Decals are pieces of thin plastic that when you get them wet they separate from their backing. You then slide the decal where you want it and let it dry. Whalla, you now have the markings you want on your cars.
There are two big problems with decaling. One is called silvering, the other is tearing.
Silvering happens when air gets trapped between the decal and the surface you are applying it to. The air bubbles look silver under the clear plastic of the decal. Solving silvering is easy. First your surface must be smooth that you are applying to. Spray your model with clear gloss finish. This provides an excellent surface for the decal to adhere to. Secondly before you put the decal on, apply micro sol or some other setting solution. This will soften your decal and allow it to snug down around any raised details. This gives the decal a "painted on" look since the decal follows all the bumps and grooves of the surface. Also apply more of the setting solution as it dries.
To prevent from tearing decals, you need to make sure they have been in the water long enough to loosen from their backings. If you try to just dip a decal in the water and force is off the backing you will tear it. Be patient. A decal the size of the Ches-C logo below is in the water for about a minute before I bring it out. It then easily slides off the backing and onto the car.
Trimming decals is also important. Cut them
as close to the logo as possible. Notice the left picture
I trimmed it fairly close. Note on the other pic the two
System" logos have not been trimmed, but the one to the right of
This will mean there is less film on the model and less chance
I trim all my decals.