Pencil Tool

As Simple As Photoshop > Tools > Pencil Tool

Pencil is freehand painting tool. Unlike Brush it can't have soft edges:

In the Toolbox, select the Pencil Tool.
Choose brush size and style*.
Select color.
Paint.
on the Options bar you can define also blending mode (on animation I choose Hue) and Opacity.
Auto Erase option allows you to use the Pencil as Eraser Tool:
- Select Auto Erase
- When your stroke starts on area with foreground color (cyan on animation), the tool erases.
- When your stroke starts on area with any other color the tool draws.

* More about choosing brush.