Mamacat,
Here's what I usually do:
Paint Chips.
For worn areas:
I've used drybrushing in the past, but I like using powedered graphit better. You can use some regular pencils, scrap off some of the graphit and rub it on the area I want to show wear.
If I wanted a true "chipped" look, A good technique is to paint the model the color of the "chip" first and let it dry very good (several days). Then applying some small dabs of rubber cement, then paint the main color. Once it has dried, I would remove the rubber cement and have instant chips.
I've heard of another paint chip technique which I want to try.
You would paint the model in the "chip" color first, but use acrylics. Once they have dried at least 48 to 72 hours, you can come back and apply the overall color using enamels. Once the enamels have set for a short time (I don't remember how long) you rub a small amount of Thinner on the area you want to chip and very carefully with a wooden stick, remove the enamel paint.
There have been some posts here on using Steel Wool to do the paint chips. The technique is to dab some steel wool into your paint. Then you pat off as much as possible. Then you apply it to your model by pressing the steel wool on the model where you want the paint chips to go.
Camo Paint.
Your best bet is to apply it the way it was done on the real thing. For the Sherman, I would apply the camo over the OD base.
I don't know if you have an airbrush, but if you do that to me is the best way. But, if you don't, I wouldn't worry about it because camo jobs were applied by hand as well. Some (particularly winter whitewash) were almost exclusively done by hand.
I hope this helps.
Good luck on your build.