Custom Post widgets are created by how you categorize Posts. The widgets will bring into the widget container selected posts with a designated category.
1. Create a post and assign a category or add a new one.
2. Go to Appearance> Widgets
3. Drag the Custom Featured Post into the desired Widget area.
4. Click the carrot to open options.
5. Fill out all desired data. Here you will see restrict by category. This will only display posts with this category.
Save and you are done!