The smudge tool is used to smear paint on your canvas. The effect is much like finger painting. You can use the smudge tool by clicking on the smudge icon and clicking on the canvas and while holding the mouse button down, dragging in the direction you want to smudge.

As usual, you have a host of options which affect your smudge located in the Options palette.

For the most part, you will use the pressure option. The pressure option modifies how powerful your smudge is. If you set it to 100%, you will wipe away all the existing paint. Set it to 20% and it will be as if you are trying to smudge dried paint.

Further, you have a few good options in the brush options menu such as "Darken" and "Lighten". Both Pressure and Darken examples are shown below.

Another cool option is the "Finger Painting" option. When the finger painting checkbox is checked, Photoshop will add a little bit of foreground color to your smudge. This mimics a situation in which you actually dipped your finger in a bit of paint before you performed your smudge.

The final option, the "Sample Merged" option is used to blend colors from lower layers of a multi-layered canvas. We have not yet talked about canvases so we will leave this discussion for later.