Here is a very good tutorial on understanding layers for the beginner. It consists of 8 short pages that cover the concept of layers, including merging, linking, deleting, etc. It also touches on blend modes.

http://www.sketchpad.net/psdlayer1.htm

Thanks Reka for posting that link, I am sure any beginners will find it of great value

Thanks Reka for the link to a very clear explanation of layers; the heart of Elements.
Kev.