You can use it to seal your entire foam piece. I've used it as well as hyperballistik and we have both had great results. You should use Alex Plus silicone caulking from Walmart.
Get a bowl of water and a sponge. Squeeze a small amount of caulking out onto the piece you are sealing, wet the sponge and squeeze it out leaving it damp. Then start rubbing the caulking around filling in small recesses and pin holes, even "little" gaps where you joined foam together. When you are finished, the part should have a "slight" white haze over the entire piece, as though you spilled paint on a floor then tried to wipe it up. Do not leave alot on the part, because if it's thick it will crack and that's not good. Hope this helps and I hope I explained it good. Let me know if I need to explain it better.
As far as the spackling goes, if you're talking about drywall mud, I wouldn't use it because it's not flexible, thus it will crack...thus...that will suck.