It is brushed over the toy, and pools into the cracks, giving more "depth" to the model and dulling any plastic sheen.
Exhibit A: A $10 plastic model of the Milennium Falcon, from a local junk shop
You can see the wash on the bottom left corner
(I left the radar unwashed for contrast but I forgot to tell my photographer/wife about it)
So -3 minutes later with black wash casually slopped all over it - look how much more realistic is looks. It is now similar to hobby-grade kits available for $50+....
(Interestingly, it is very similar to the prepainted FFG model for their X-Wing game that costs $52 - guess those flight stands and unit cards must cost $42 to make...)
As you can see by the models nearby, I planned to use it as a 15mm dropship or a mothership for space fighters... but it's too iconic - everyone walks past and says "wow, Milennium Falcon!" grrr
Another source of cheap models are junky collectibles such as the Heroclix, Horroclix, and Mage Knight games - or any prepainted plastic toy in the right scale. They usually have hideous factory paint jobs and there are some hideously deformed sculpts... ...but there are decent ones among them. The trick is looking past the paint and seeing the model.
As well as a wash, they often get a highlight in a lighter shade - i.e. brighter red on cloak creases of Magdalena(l), and butt cheeks of Witchblade(r) - where the sunlight naturally catches the mini. The Nazi in the middle had his cloak edged in grey so he didn't look like a shiny blob of black.
To finish, I streaked the hair of Witchblade to give it depth, and dulled the bronze kneeplates of Magdalena with a wash.
I see there is some sort of prepainted D&D game which might be fruitful for cheap models, but with postage from US skyrocketing my sources of cheap clix have dried up - the postage costs many times more than the models.
(if you've seen the bland little out-of-scale pygmies in a game, you'd know what I'm talking about).
"chainmail bikini" trope is ingrained; I originally gave her brown leather pants but it looked odd...