A quote from http://www.pacelineproducts.com/products/chamois.htm, the manufacturer of Chamois Butt'r:

To apply Chamois BUTT'r: Put 1/6 to 1/3 ounce of Chamois BUTT'r either on your skin, or on the pad of your shorts, before you put your shorts on. It's your preference, the Chamois BUTT'r ends up in the same place either way!

I place it liberally on my genitals and have for years. I go on 6 day mtb tours where showers are few and far between. The lubricant is water-disoluble so you are not left feeling icky and it washes out of your shorts easily. I take babywipes to use morning and night for these tours and have NEVER had a problem with infections. However, I get out of damp shorts immediately and rotate shorts through the tour if I can't have clean shorts for every day.