I usually use an amount of plastic wrap that’s about double the length of the plate.
I usually use about ½ cup of water.
If you want the colors to muddle a lot, pour the water straight onto the yarn. Otherwise, I suggest pouring it straight down the side of the plastic wrap right next to the yarn, and letting it soak in.
You can also mix kool-aid with water and apply it to the yarn like that, but I find that if you do things that way you don’t get colors that are nearly as saturated. And they blend more.
BE CAREFUL WITH DOMINATING COLORS. I can’t stress this enough. I find that lemon-lime green spreads and takes over quite a bit, but the major culprit is RED. Any kind of red. Red is out for world domination, and it won’t stop at your yarn-- it mysteriously jumps onto and stains your hands as well. If you’re variegating yarn and you want some red in there, add it on sparingly, and add it far away from pale blues and yellows. If you want a gradient with blues and yellows, I suggest using pink instead of red. Also, never pour water straight onto red.
Wash your yarn well after you dye it. Be careful of your fingers: it's very hot when it leaves the microwave.