well i have a couple of soakers with pictures knitted into the soaker as its knitted, they aren't added once its finished. I can kinda see how you do it, like one I have is a duck on the bum & I can see its simply the yellow added on those particular stitches but Im not sure if there is a certain way of doing it.
I would guess it would involve counting the stitches to know where to add the colour....