As the name suggests, milk is a principal ingredient in the material, acting as a binder for pigments the same way polymers do in latex paints and oils do in oil-based ones. People have been mixing milk paint for a long time; it has been found on artifacts dating to ancient Egypt, although it's perhaps most commonly associated with colonial-era furniture. The fact that the material doesn't give off noxious vapors (often called VOCs) accounts for its continued appeal within today's green building community. Craftspeople, meanwhile, value its saturated colors and translucent finish, which can be used to give wooden furniture, terra-cotta pots, and other textured surfaces an antique look.
You can't, however, simply mix milk with color pigment and spread it on the walls. The following recipe will yield enough paint to cover a bureau or other large furnishing.