The far left button on the layer palette is for adding layer masks. We'll talk about this more later on in this lesson. To change the stacking order of layers, you simply click and drag them into a new position in the layers palette. Now let's look at the options at the top of the palette. The menu at the top of the layer palette allows you to set the blend mode of each layer.
Blend modes alter the way a layer interacts with the layers below.
The default blend mode is normal, which has no effect on the layer. Besides, working with blend modes is not something you can get a handle on by reading about. This is one of those things that you must experiment with. So, I strongly encourage you to set aside some time and visit the links in the sidebar to the right while you experiment and explore the blend modes. I've selected a variety of links because each one provides different explanations and example images and will give you a better overview of the range of effects you can achieve with blend modes.