In this painting we have two completely different applications. The sky is a wash, and the windmill is a pencil drawing. First focus on the contrast of the sky and the background. It was done first and allowed to completely dry. Then the subject of the painting was drawn with pencils.
Lets look at the wash. A gradual darker to lighter effect. A graded wash is the thin spread of color, painted very wet, that proceeds from a dark tone to a light one, or, if you wish from light to dark. To achieve this effect wet the area of your paper you wish to cover with plain clear water. Then, starting at the right with your darkest tone, paint in horizontal strokes, adding water to the pigment as you go across the paper. To achive white clouds, just leave it. The yellow highlights make it appear as if it is early morning.
The windmill was originally drawn in sketch but only finished after the wash was allowed to dry. The colored pencils make the subject stand out from the background in a way you can not detect in the photo. The watercolor wash or wet in wet medium gives you a unique piece of paper to make your drawing upon.