Let's take your horse in the clouds pic, and make an ideal comparison on layer usage:

First, lets say you have the cloud image (you would make this the bottom most image aka the background).

Then let's say you wanted to add a picture of horses into the clouds. In the Layer dialog you would click the paper icon with the green plus, to add a new layer. If the picture of the horses was an image and you only wanted the outlines of the horses, you can do several things: 1) create a mask on the horse image (layer) and erase out the background around the horses. 2) use the free select tool to select the outline of the horses then delete out the background.

After the horses have the background removed, you could add another image of another object, like angels or something, and perform the same exact steps. Now you would have 3 layers, one of the clouds (the background) one of the horses (with background masked out or etc) and another of the angels (same process as horse layer) Now you can effectively move the horses around without effecting the angels or the clouds. And you can also change layer modes or blend, or reduce the opacity of the layers to help the images blend into each other.

I am sure there has to be some good layer tutorials on YouTube that can show you a lot better than any of us can explain it. I'll check around and see.

Check Jolie's video here:

Amadora you are not stupid.

HERE ALL THE SECRETS ABOUT ALPHA REVELED

alpha = transparency
alpha channel = channel for transparency
alpha mask = a mask applied to transparency

see how much is simple if explained with simple words ?