This is known as decoupage, and there are a number of ways to go about this. (There are also many other customizers out there who are higher authorities on this subject.) In general, you’ll want to apply some of the gel medium to the back of the paper emblem, and some to the target area of the figure. Apply the emblem, and then use the brush to smooth out the excess gel medium along the edges. You can even brush the gel medium over the emblem, so as to help the paper conform to the body shape underneath.
One warning: Don’t apply matte gel directly to emblems printed using an ink-jet printer. The ink will smear. Seal the ink with Testor’s Dullcote first, then apply the matte gel. (Laser-printed emblems don’t experience this issue.)