Custom Widget are part of sidebar or footer, that you can add direct from here by drag and drop.
For Custom widget(s) option go to widget under appearance menu in admin panel.
** There are three section(s)
1. Available Widget(s) :[2] All available widget(s) ( By default or installed by WordprePlugin ) will be present in this section, You can Drag and drop widget from here[2]> to sidebar[4] or Footer Area[5]
2. Sidebar data :[4] There are some pages with sidebar like blog-left-sidebar, blog-right-sidebar, blog-details, Event etc... In sidebar if you want to add or remove widgets , then for add widget you have to drag here widget form available widget area[2] to sidebar widget [4], and if you want to remove widget then please click on that widget, widget options will open and there will be a remove option, by clicking on that option you can remove your widget from sidebar.
3. Footer Widget :[5] There widget area on footer... In Footer if you want to add or remove widgets , then for add widget you have to drag here widget form available widget area[2] to Footer widget [5], and if you want to remove widget then please click on that widget, widget options will open and there will be a remove option, by clicking on that option you can remove your widget from Footer.
**If you want to set title or some other option then , when you will click on widget, after that widget option will open under that from there you can set options.