A stencil for The Sims 3 is very similar to an overlay (see also: What is an overlay?) in that it adds permanent, non-recolorable decals, logos, and texture effects to your creation. However, there are some differences.
Stencils apply only to a given color variation
If you’ve made a door and added a red color, a yellow color and a blue color, adding a stencil to the red color will ONLY affect the red version of the door. If the decal is to apply to ALL colors, you should use an overlay instead (see What is an overlay?).
You can layer up to 4 stencils per color variation
Stencils can be layered for special effects. This is a single milk churn mesh using three color variations. The variation on the left uses one stencil to add some rust, whereas the variation on the right is using two-layered stencils to achieve a much more rusted effect.
Working with stencils
Each color variation of your creation can accommodate up to four stencils per variation. The stencil slots can be found on the TEXTURES tab of Workshop beneath the patterns.
Stencils, like overlays, use the alpha channel (see also: What is an alpha?). The only part of a stencil that will appear on your mesh is the part where the alpha attached to the image is white. Black areas will be ignored. Below is an example of a stencil. The original multiplier shows how the corner decals line up with table top of the multiplier. The stencil’s green leaves are white on the alpha, while the rest of the alpha is black.
For more in-depth information on Sims 3 stencils and other textures, see: Object Creation Part 2: Object Textures.