HPL2/Tools/Level Editor/Decal Editmode
Decals are used to add detail to geometry. Scorch marks, blood splatters and such can be added with this tool, only thing needed is a proper material and a surface to apply it to.
The EditMode window has some parameters to control the creation, as follows:
Surface types affected: these buttons will set whether a geometry object will be affected by a decal. Can be Static Objects, Entities and Primitives. Material: .mat file that will be used by the decal. Angle: 2D rotation of the decal around the surface normal axis. Can be randomized. Size: 2D size of the decal. Depth: if "Use custom depth" is false, this will be the greatest value from the 2D size vector. Else, it will be picked from the input. Color: color value that will be multiplied by the decal material color. UV SubDivisions: this input will control if the decal material should be subdivided, and how many subdivisions there will be. Use SubDiv: this control offers selection of which subdivision should be shown, or just choose a random one on creation.
More on decals here.