|Photoshop Intro Video|
Q: Photo Editing: What is a Pixel?
A: The smallest controllable element of a picture represented on the screen.
Q: What is a Layer?
A: Photoshop layers are like sheets of stacked transparencies. You can see through transparent areas of a layer to the layers below. You can also change the opacity of a layer to make content partially transparent.
Here is another image that illustrates how layers work:
Photoshop Introduction Video