Decal
A texture with transparency on a floating polygon, so that it appears to be painted directly on the underlying mesh. When placing decals, care must be taken to avoid Z-Fighting. Decals are commonly used for effects such as bullet marks, graffiti, broken edges, and tire tracks.
For hard-edged decals use "alpha test" because this is usually cheaper to render. If the decals must be softer (tire tracks in a racing game) then use alpha blend instead. See also MultiTexture.
Examples
Using Decals for Destroyed Structures - from the CryENGINE Art Asset Creation Guide - Using alpha blended decals for broken concrete edges.
Broken concrete for CE3 (Tutorial) - by Valdemar 'sltrOlsson' Nyhlén - Video tutorials using Zbrush and Maya to generate tiled maps for broken concrete edges.
Fallout 3 – Edges from Simon Schreibt - Investigating decal usage in Fallout 3.