It can be used for skies of any colour, but works best for single shaded skies. Check for puddles, etcetera, or other reflective surfaces which will still show the original sky post edit, and make the manipulation apparent.
The first thing you need to do is choose a sky. One with blue sky, or blue sky and a few wispy clouds is usually the most common choice.
The next step is to select the unwanted sky. If it is a single colour, the magic wand tool will work well. If not, experiment with different selection tools, or raise the tolerance. At the top bar of the photoshop interface you can change the tolerance. This is based on a number range from 0 to 255. It is related to colour, and brightness. Setting a tolerance of 0 selects only one colour, while 255 selects all colours – the whole image. Set a tolerance suitable for the shade of your sky. Cut the sky out.
Go to your sky image, duplicate the background, and select a destination. Choose the image you are working on as destination. This will move the duplicate above your image. Move it to the layer below.
The next step (Only if you used the magic wand tool) is to create a clipping mask. Make a solid fill layer, and place your sky on top of it. Go to Layer > Create clipping mask (Or using keyboard shortcut Ctrl (CMD if on a Mac)+Shift+G).
This should select the outline of your selection. Select the Marquee tool and right click. Select refine edge, and soften it slightly.
Next, you need to fill in the gaps. Duplicate the sky layer, then hide it by clicking the eye button next to the layer icon.
Select the main photo, and go to Select > Colour Range. Use the eyedropper tool to select the gaps, and set the fuzziness slider so that a good section of the gap is covered.
When you hit OK, large areas will be selected, and dont unselect these, or you will have to start again!
The layer mask will select the important areas, so use a black brush to go over the areas you dont want. Use a white brush to undo this. Once that is done, study the image carefully for reflective surfaces, or mistakes, and correct these if necessary.
Now is the time to make any other edits, and check the image over one last time. Once you have finished, save the image.