Layers are exactly what they sound like; they add different levels to the canvas in Photoshop. This allows you to put objects on different levels allowing you to move layers around independently or blend layers that are on top of each other. The layer palette is usually located at the bottom right of the Photoshop work-area (if not, you can find it under the Window > Layers) and the layer blending modes is in a drop down menu located on the top left side of the layer palette.
These layer blend modes take two layers and blend them in different styles. For the sake of example, I will take two images, one on layer 1, and one on layer 2 (layer 2 on top in this case), and show how they blend together with the different styles.
Normal Mode: The colors of the two layers will not interact in any way, and it will display the full value of the colors in layer 1. The normal mode is the default style of any new layer.
Multiply: This blend mode will darken the lower layer based on the darkness of the upper layer. No part of the image will be brightened and white parts of the upper layer will just become transparent.
These layer blending modes come handy when doing photo manipulation; adjusting brightness and contrast, colors, etc. And can also come useful when trying to blend different layers to achieve different effects. Try making 2 different layers next time and experiment with the given layer blending options to achieve the effect that you desire.
Personally, I like to use layer-blending options a lot when I edit photos. You can manually set the brightness and contrast and color saturations using the image options in Photoshop, but sometimes by simply duplicating the layer with the picture on it and altering with some blending options can lead to quick and efficient results.
Lets say the color in the original picture above on the left wasn’t good enough. Simply just duplicated the layer and then putting the top one to the blend mode “overlay” will accentuate the colors by multiplying the darker areas and screening the lighter areas, which will lead to a higher contrast and vibrancy in color (result on right).
Or in another case, when people want to add a grungy effect to pictures, blending modes can be used as well. We want to give the picture an old look so lets first made the picture black and white by desaturating it. You can do this by going to image → adjustments → desaturate. Then we can take the grunge effects, which can be made personally by you by downloading grunge brushes online. You can put the grunge design on a white background so you can see the design more clearly. And then after you can set the entire layer to multiply over the original image, and the property of multiply will allow it to completely ignore the white and leave just the dark grunge design over your picture.