The Flow tool makes kind of a fine spary of colour at it's lowest settings, and a darker splodge of colour with fine spray blurry edges at it's higher settings. So basically what you do is select the paintbrush tool and paint your base colour at 100% opacity and 100% flow (the sliders are at the top of your canvas when the brush tool is selected). Then on a new layer, select a draker tone of your base colour, set the Flow to 1% and start painting layers of fine airbrush shading over your base colour. Keep adding layers to get the opacity that you want. The edges will be smoothly blended. Do the same with a light tone of your base colour and inbetween shades to define your shape with a nice silky smooth finish.
1. The larger your brush size, the smoother the blending, smaller brushes create a bit of a streaky effect and you end up seeing the lines, but they work quite nicely for areas of detail as they appear to focus the spray of colour
2. Setting the Flow to 1% creates the finest and smoothest blend of colours but you will need many layers of it if you want the colour to realy show. Setting your Flow higher, even just slightly creates a more opaque effect but also can end up a bit streaky.
A 1% difference in Flow can create a very different effect, so test it out a bit.
I used a combination flow levels and brush sizes for this exercise - 1% flow in the cheek and nose areas, with higher flow setting and/or smaller brushes for the detail around the nostrils and eyes. I was working into a sketch that I had done previously so to keep the sketchy look I also used some straight 100% flow brushes for the hard lines of the mane etc.
The brown and blueish splodges above the horse are examples of what the low-flow brushstrokes look like on their own, with the dark squiggle being a slightly higher flow setting. I work with a pentablet so my brush is pressure sensitive which also helps a lot.
Anyway, hopefully this will be of some use to someone new to painting in Photoshop who likes the smooth effect and but doesn't know how to do it. Personally I'm not sure that I like the very slick and smooth look, which is why I've roughened it up a bit with some sketchy lines.