All the flat images (e.g. the lion on the Chadwyck-Healey Christmas cake, the Ranma artwork) are produced by starting with a printed image and tracing it onto the cake. (My freehand copying is good, but not that good.)
I trace the outlines of the image on greaseproof paper, and then place this tracing on the cake surface (note: I use ready-made roll-on icing to ice the cakes when I do this type of decoration. I don't believe anybody can get royal icing that smooth!) in the position I want the image to be.
Then, using a knife with a fine point but which isn't actually very sharp (I don't want to risk cutting the hard surface of the icing -- it allows food-colouring to 'bleed' into the icing), I press through the tracing paper along these lines. This leaves a faintly-visible scored outline on the surface of the cake; it's difficult to see, but just about possible to follow.
Using a 'liquorice pen' (like a felt-tip, but the dye is liquorice and therefore edible -- they're available from most cake-decorating outlets, Elizabeth David cookshops, etc.), I draw in these outlines. I usually start with the most simple, most obvious outlines, and then line the tracing up with these (visible through the tracing-paper) to ensure that the smaller lines are in the right place.
You've got an outline: you just need to colour it in. You learned this in primary school, right? Don't go over the edges: Mrs Harradine will know.
I do all the colours with food-colourings (I prefer the paste variety, but the liquids are cheaper and quite adequate for most things), ordinary art paintbrushes, and a saucer in which to mix colours. It's a good idea to have a small piece of icing to test colours on -- if you roll this out at the same time as you're icing the cake (okay, okay, "... using the spare icing you rolled out yesterday..."), you can also use this to test whether the icing's dry enough to draw on. (If you try to draw with a liquorice pen on still-wet icing, it tends to press in too hard; and in general the colours are more likely to soak in and spread.)
It's easier to mix colours on a plate and then paint them on than it is to blend further layers of colour on top of each other, because the more layers you do the wetter the icing gets... then the icing starts to disintegrate into the colour, and DOOM ENSUES. That said, I do do some layering to get shading effects (Ranma's hair was particularly challenging) and I've not had any major disasters yet.
The more distinct layers you want (this is starting to sound like Photoshop 101), the longer it'll take, as you really need to leave some drying-time between them. The manuscript on the Chadwyck-Healey Christmas cake had this problem: I had to do a very light undercoat of yellow colouring in rough brushstrokes to get the old-manuscript effect, and then leave that to dry for long enough to be able to do the script over it (I used a piece of kitchen-tissue to simultaneously mottle and dry the yellow undercoat a little). I used a paintbrush for the script; liquorice pen just looked too neat, too much like printed text, and I wanted it to look more hand-written.