You set up as many sheets as you have colors. Let's think about a 50's era stars and bars USAF insignia.
The first screen, a very pourous material, would have the whole pattern, roundel and arms left untreated. Te rest would be coverd with a non-pourous substance. White ink would be pulled across this by a squeegee passing though the screen onto the decal sheet. (Actually, the fisrt would have been the decal film.)
The next screen is maybe for blue. The star in the center and the center of the arms would be filled in on the screen and the ink drawn across. You now have essentially a WWII star and bar insignia.
The last screen would be for red. The only "openings" are for the red bars on the arms.
When dcals are off register, someone didn't line up the cross hair correctly and the ink is applied where it shouldn't go.
I'm not a screen printer but my job had me work with a guy who taught this in a vocational workshop training program back inthe early 80's.