This is one of my favourite techniques - to "colour" a stamped image with Distress stains. It is not a very precise or exact technique, but by heat embossing the stamped image, you "force" the fluid Distress stain to stay within a certain area. The fact that the colour bleeds and splashes a bit just adds to the "watercolour" feeling.
Here you can clearly see that I used a light pink colour for the angel's face, a blue for the background and green for the banner and stamp. I stamped a splash stamp on the background paper (regular cardstock) and embossed in white for a snowy feeling.