As discussed in the Concepts section, Layers float above the Image like sheets of glass, allowing you to edit the underlying image without fear of messing it up.
When you first open or create a new image, by default it will have one paint layer attached. You can add more by selecting New->Paint Layer from the Layer menu. You will see that there is another selection on that menu, the ability to create an Image Layer.
Image Layers are more like the layers in other packages such as PhotoShop, yet with a twist. Photogenics Image Layers consist of a Paint Layer that has an image attached to it. When you Paint onto an Image Layer and Fix your changes, the changes are stored in the attached image, not the background. To illustrate this, follow these simple steps. Start with a new image with the default setting of one paint layer. Ensure that Experiment Mode 
is turned off. This way when we paint with a different colour, the changes are merged with the background automatically. Draw a few squiggles, each with a different colour. Select the Position Layer Tool 
, and use the mouse to drag the layer across the image. You will see that only the squiggle drawn in the current colour is moved, all the others squiggles are Fixed into the image. Now go to the layer menu, select Delete to get rid of the paint layer, then New->Image Layer to create a new Image Layer. Repeat the same process of drawing different coloured squiggles. This time when using the Position Layer tool, you will see that all of the squiggles moved! This is because the squiggles were fixed into the image attached to the Image Layer, and not the background. Note that this affects how the Paint Modes work. If you paint with Negative Mode on an Image Layer, you will be inverting the image attached to the layer, not the background (although it may appear otherwise if the image layer has lots of paint on it already).
You can have as many layers as will fit in memory. You can mix and match Image and Paint layers. Note that if the Paint mode you are drawing with reads from anything other than directly below the area being processed (Blur and Emboss etc all read from an area bigger than the one being processed depending on the size of the radius specified), there will be a large speed penalty as the amount of processing increases dramatically. Don't feel too bad though, if you were using PhotoShop you wouldn't even be allowed to paint Emboss or Blur directly onto the image anyway, layering image processing operations like this in real time isn't the easiest of things to program :)
There are two Layer menus, the standard Amiga menu accessed with the right mouse button, and the popup menu assessable by clicking where it says "Layer" in the Image Control Plugin. You can create more layers with New->Paint Layer and New->Image Layer as discussed above.
Once you have more than one layer, you can switch between them by clicking on the layer thumbnail icon in the Image Control Plugin. You will see a thumbnail version of each layer appear to the right of the mouse pointer. You can select another layer by moving the mouse over the thumbnail you are interested in, and releasing the mouse button. You will notice that the current layer is slightly recessed and can't be selected.
You can also scale the layer, clear the layer, and invert the layer. Inverting the layer can be a great timesaver. Imagine that you want to process everything in a photo of a face, but the eye. You could draw all around the image until nothing but the eye was left, or you could just paint in the eye, then select Layer->Invert to leave everything but the eye covered.
You can specify the order the layers are placed on top of each other with the Layer->Move menu. You can move the current layer up, down, and to the top and bottom of the stack.
The Arrange menu lets you reset the X and Y position of the layer. Layer->Arrange->Top Left is the same as clicking on the reset button in the Position Layers Tool options, it puts the layer back to where it started at if you have moved it around. Arrange->Centre may appear to have the same effect, but that's only because most times the layer is the same size as the image, therefore centring it is the same as putting it in the top left. However, if you have scaled the layer using the Layer->Scale menu, or scaled the image without scaling the layers, you will be left with layers that are a different size to the image, and thus being able to centre them is a useful function.
The Collapse Layer menu item has the same effect as pressing the Fix button. Collapse but Keep Layers does a Fix, but doesn't erase the paint layers. The effect is that the current amount of paint in the layer is merged with the background, yet the same amount of paint stays in the layer, so you end up with twice the amount of paint on the image. This is very useful when you want to apply different effects to the same part of an image. One you have selected Collapse but Keep Layers, you can go into Experiment mode and change the Paint Mode being used. For example, you could type some text into a paint layer using the text tool, with the paint mode set to Blur. You could then Collapse but Keep Layers, and change the paint mode to Adjust mode and increase the contrast of the text to create an more impressive effect than if you'd just used one effect alone.
If you want to see what the background image looks like without the current layer, you can temporarily get rid of it by selecting Layer->Hide.
Finally, to remove the current layer from the image, select Layer->Delete.