The simplest analogy to understand Photoshop layers is to imagine a number of transparent sheets stacked on top of each other. Here we have a background layer, a photo (layer 1) and a text box (layer 2).
The idea behind Photoshop’s layer system allows us to do is ensure each element of the drawing or image we are creating can be changed, deleted or altered without modifying the others. This allows large scenes to be created using multiple objects, photos and text.
Read page 71 of the textbook “Essential Photoshop Basics”.