Shading is an important part of giving your micro depth. It keeps them from looking boring. There are many shading techniques that can be used.
Basic Three Level Shading
Originally Micros had only two shading levels, but eventually three levels became the standard. Three shading is simple. You put the darkest level in any corner as just a single pixel. Then you outline with a lighter shade. Then you put in your base color.
Overlapping is used when you have clothing or other items covering skin or other clothes or items. It usually takes the form of a fourth level to designate what side of a line is lower and as such would have a slightly deeper shadow.
If you have more than one item in an overlap, then in the overlaping corner you would put one pixel of a fifth level dark. This is demonstrated to the right