If you do a lot of work on an image you will soon learn that it is difficult to make sure you do everything in the right order. You will often wish that, half an hour ago, you had done something slightly differently, but you don't want to undo everything you've done since. Layers make life much easier.
Think of layers as sheets of transparent material each with a picture on, stacked on top of each other. Where the sheet is transparent you can see the sheet underneath. Where the sheet has a picture it hides what's underneath.
When you have several layers you can work on only one at a time and that work is independent of all the other layers.
You can see how your layers are stacked up in the layers palette (on the right of your screen). Each layer is shown as a small 'thumbnail' image. The left hand column (with the 'eyes') enables you to switch each layer on and off to see the effect of your picture with and without it. You can drag and drop the layers to change the order.
When you start work on an image you have just one layer - Background. Right click on this and select 'duplicate layer'. This gets you a copy that you can work on. Don't touch the original background - keep it in case you need to go back to the original, in whole or in part.
Make a selection. Copy and Paste it. You will find it has created another layer. Make sure this layer is active, by clicking on it in the layer palette. Try working on it, e.g. by moving it or changing the colour balance.
Try changing the opacity of a layer and notice how you can see through it to the layer beneath. Useful to control the degree of the effect you are trying to achieve.
By right clicking on the layer you can change the properties - e.g. to give it a descriptive name.
The pelican picture above was produced as follows:
Make a copy of the original - background copy.
Make basic changes to this - level and colour balance.
Find another picture which makes a better background. Make sure it is the same size.
Select the top part of it (because, in this case, the bottom of the picture included some bushes). Make sure the bottom of the selection is heavily feathered. Copy this, change to the pelican picture and paste it.
Now we've got the background OK but we've lost the top of the bird. Go back to the background copy layer. Carefully select the bird using the magnetic lasso. Copy this and paste it. Move the layer to the top.
Create a new layer (with the button on the top of the palette) and name it 'sky'. This will start off completely blank. Set a blue as foreground colour. Draw a gradient (foreground to transparent) at the top of this. Position the layer just above the new background but below the top pelican. Adjust the transparency of the sky layer such that it nicely darkens the sky but still allows the clouds to show through.
Now sharpen the top pelican image (use unsharp mask). Don't sharpen any of the background layer since you want that to stay blurred and out of focus.