jlf2n posted a great thread about how to reverse engineer methods for shading. In his post, shading refers to using the color brush to add shadows. You'll also see this sometimes refered to as "grayscaling." Here's his intro:
Being new to the NWN2 toolkit I set out in search of a tutorial to show me a terrain shadowing tricks. I couldn’t find any so I set to dissecting one of the areas that came with the main quest to see what I could see. The process I used was very helpful to me so I thought I would run through it here for you guys.
He goes on to walk you through opening an area from the OC, removing all the shading, and trying to recreate it. A great idea for learning how the people at Obsidian put some of the areas together.
Check out the thread on the nwcitade here:
http://nwcitadel.com/forums/showthread.php?t=1158