A technique where a top layer of color is scratched to reveal a colour beneath. The term comes from the Italian word sgraffire meaning (literally) "to scratch".
The 'wrong end' of a paint brush works well for sgraffito. If you use a knife to do it, you need to be careful not to accidentally cut through the paper or canvas.
For more on how the technique works differently when using acrylics/oils and watercolors, see Painting Techniques: Sgraffito