Weird though it may be, this is a pretty simple technique to accomplish realistic-looking chipping and weathering effects on scale models. It works by putting a barrier between the top coat of paint and an undercoat color (which can be grey, black, metallic, or rust depending on the material you want to simulate), and then using that barrier to make it easier to chip off the cop coat in a way that is very similar to how actual paint chips off of metal surfaces over time.
Here's a tutorial with some in-progress pictures:
Unscented hairspray (cheaper is better!)
Gloss protective coat ("top coat")
Salt (multiple grain sizes if possible, but not necessary)
Large, stiff brush
Small brush and washes for finishing steps
Step 1: Paint your base coat
Don't forget, when you chip off the top coat you're going to be able to see what's underneath! It's a simple concept with a lot of room for flexibility.
You can quickly create a rusted look, for example, by painting the entire model rust colored before you do your chipping. That way any removed paint will reveal rust! You can also do a patchwork rust/metallic undercoat which will give a variety of rust and bare metal after chipping. Try a few different things on a scrap part before you test on your model.
But whatever color you choose, make sure to seal this layer with a gloss top-coat and give it time to dry (at least 48 hours). I use pledge with future shine (future floor polish) for this step. But you can also use a lacquer gloss; just keep in mind that you need this undercoat to be tough so that it can hold up to the chipping steps later on.
Step 2: Hairspray and/or salt
This is where things get weird. You're going to want to pick up some unscented hairspray from the store. I usually get the smallest can I can find. Yes, hairspray...the stuff people use to make their hairdo stay in place. That stuff.
Once your undercoat is fully dry and protected with a gloss top-coat, lay down a few coats of hairspray. Now, the thickness of the hairspray coats will determine what kind of chipping effect you get. If you go really heavy, the hairspray will settle in the crevices and cracks of the part and the paint will come off even more readily in those areas. A thicker coat of hairspray will also give you larger chips, as the paint will come off in larger "chunks." I personally prefer thinner coats for regular weathering unless something is derelict.
So, where does the salt come in, anyway? Well, while the hairspray is wet, you can throw some salt onto the wet model and it will stick! Then the grains of salt will act as tiny masks which will leave visible spots of undercoat when you finally spray your top layer. I use a mixture of different granularities of salt to give it some variety (I use kosher and regular table salt, but you can also use rock salt for larger models). Focus the salt on areas which will have chipping (for a tank, you can sprinkle it around the treads where rocks would be kicked up. For a mech, I go heavier on broad forward-facing armor plates where small arms fire might have ricocheted off and caused exposed areas to rust).
You can do this technique without salt, as well. But I find that even just a little bit of salt really helps out with the chipping steps. Less is more!
Step 3: Top coat
Once your hairspray has dried for 30 minutes to 1 hour, (but no longer than 1 hour since you want it to be freshly cured to facilitate chipping) you can spray on the model's paint color just as you would if you weren't weathering.
I do make a few changes to my usual painting style, though. I use black to pre-shade, and I always put a dark shade around any areas where there is a large concentration of salt. It helps add depth to the chips.
I should mention at this point that I've only ever used acrylics for this technique. I've used both Tamiya and Vallejo model color successfully. I like acrylics because I know there aren't any solvents in them that will react negatively with the hairspray (Tamiya's solvent seems to be an alcohol, which is gentler than lacquer or enamel thinners). Let this coat dry for about an hour so that you're sure it's really dry.
Step 4: Chipping
Now the real fun begins. You're going to want to grab your brush and dip it into some hot water. When you brush hot water onto the model, the salt will dissolve or fall off and the hairspray will also dissolve and take the top coat of paint with it! It's a really neat process when you watch it happen. Sometimes you have to push down hard on the brush to achieve the kind of chipping or scraping you're looking for. The result looks something like these Warmachine mechs:
You can see where I focused the brush on areas to modulate the amount of chipping. If I had gone easier on the kit or used a dry brush to knock the salt off, I would end up with smaller chips.
I usually microwave my water so that it's really hot when I use it, but it isn't necessary to do this; colder water will give you more control over the chipping but make the process take longer as the hairspray takes longer to dissolve.
Step 5: Additional weathering techniques
The model looks pretty good after you chip it, but you'll want to use a few other weathering techniques to really make it shine. You can go back with a small brush to highlight a few of the rust spots with a lighter orange color, or you could pick out the edges of the chips to make them stand out more.
I used washes to streak oil and dirt on this mech, and I used really thin glue and some games workshop technical paint (the dirt one!) to mud up his legs. The final model looks something like this: