Recent observations of brightness variations on the Sun during the solar cycle have motivated us to re-examine the widely held view that cool, dark starspots, covering a significant fraction of the star, are the centers of magnetic activity on BY Dra stars. We propose that the magnetic regions are better described by a bright facular network, and that the dark areas which give rise to photometric rotational modulation are actually regions where the underlying quiet photosphere is seen. This interpretation is consistent with recent observations of late-type stars that show that bright areas covering much of the star have magnetic fields with strengths of several thousand gauss. It resolves several problems with the current model, including the size, location, and stability of the starspots required to match photometric and Doppler-imaging observations. It also has interesting observational implications for the correlation of photometric rotational modulation and long term brightness variations with other surface activity, and for the positions of magnetically active stars in the H-R diagram.