The principle difference between watercolour paints and gouache paints is the opacity - watercolours are usually transparent, or translucent, and Gouache, while being also water-soluble and with a similar feel, dries to a matte, opaque layer. The two mediums can be happily used together, as both are water based, but Gouache is principally used in modern times as a colour block medium, in illustration, graphic design, poster design and manga/comic contexts. Gouache, unlike watercolour is only sold in thick, acrylic-like, paste form in small tubes or in large, value tubs.
