The effect of applying these overlay layers in turn is:
Note that drawing the shadows isn't exact. The overlay layers are often very ropey (note the sail layer!). However the fact that these aren't super smooth and finished adds to the hand-drawn feel (well I tell that to myself anyway).
As for creating decent shadows and highlights, I have to say I am guilty of a few standard tricks. I always draw the light from the NW corner. Shadows that are close to the object casting them are often sharp. Shadows further away from the object casting them are more blurred. Note the shadow cast by the fallen main mast across the deck as an example. Finally, if you want to draw attention to a specific feature, make the shadows and highlights more exaggerated and crisp - it will draw the eye of the viewer.
Right - that's it for highlights and shadows. We're almost there now.