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The Photoshop Phanatic: Photoshop BasicsPart 9: Introduction to Layers
Layers are an integral part of your workflow in Photoshop. They allow you to work on part of an image without interfering with the rest of the image. When you create a document in Photoshop, it already has one layer in it--the Background layer.
Think of layers as transparencies stacked one on top of the other:
Layers that have areas of transparency allow you to see through the current layer to the layer or layers below. Layers follow a stacking order, the top most layer in your Layers Palette is the most visible layer. By changing the stacking order and the different attributes of layers such as opacity you can easily change the composition of your document. Also by using some of the special features of layers, such as layer styles and the various image adjustment layers, you can create stylized customized effects and image adjustments that do not permanently change the actual pixels of the image below them.
The number of layers that you can create in a document is only limited by your computer's memory. Keep in mind though; that the more layers you have in your document, the larger your document becomes in terms of file size.
Below are the basics of working with layers. Open your copy of Photoshop and follow along. If you don't have a copy, don't fret; they sell it at the Jefferson bookstore.
Experiment with layers and see what you can do.