Colored foil makes the sugar skulls look traditionally Mexican! It's pasted down with the icing.
Use the foil to make the rectangle on the forehead - when you buy sugar skulls in Mexico, the seller will write the name of the person you are honoring with icing there. You can use the colored tin foils sculpturally, making earrings, cigars, flowered hats, eyeglasses and such to personalize your sugar skulls. The shimmery colored foils make great eyes! If you are making chocolates, the pieces can be covered in a foil square, like a cherry cordial, to make it festive.