When you work with clay it obviously behaves differently than fondant and sugarpastes do, and you can't keep the same level of detail with the fondant that you can with clay. But it still produces some interesting effects that can be used for fabrics, cobblestones, animal skins, etc on cakes.
Here's one way to do it, and I'll put another one up next week. This one was done using gumpaste so that I could make flower petals. The first step is to roll out a piece of gumpaste and cut it in half. Paint red food coloring (or whatever color you want to use) on half of the paste. It should be sticky but not super wet. Sandwich the color between the two pieces.
Keep cutting, painting and sandwiching the pieces until you have a piece that's about 1/4 - 1/2" thick. You can also make this a lot thicker and cut pieces off of the block. If there are any slivers that aren't stuck together on the white sections, use some water or gum glue to attach them together. Notice that this is very messy...
This needs to be wrapped up in plastic to give the sugar time to meld together, for lack of a better term. The key here is patience. If you can leave it overnight that's best, but you should give it at least an hour or two.
Once it's set, roll it out carefully to the point where it can fit through a pasta roller, then you can cut out pieces that have the stripes on them in the positions on the petals that look good to you.
Here's a rose that I threw together using the striped paste. You could use this kind of thing to make flowers with striped petals like carnations or parrot tulips, or leaves that have multiple color in them if you use multiple colors when preparing the block.
On Friday: Making blocks and sheets.