The pencil tool allows you to draw on the screen and produce a pencil-like stroke. The current Brush Color will be the color of the drawn path.

The Brush Size option allows you to specify how wide of a stroke is drawn.

The Smoothing option allows you to control how much automatic smoothing is applied to any paths drawn. Maximum smoothing will remove many points in an attempt to make a very smooth curve (at the expense of accuracy). Minimum smoothing will leave all points in the path, preserving accuracy (what you draw is what you get).