Think of it as an animation cell. You might have 1 sheet of clear with just the ground painted on it. You might have a second sheet of clear with some trees in the background. You then have another sheet with Mickey Mouse's body and head on it, and separate sheets for his arms and legs. Now they've all got clear on them, so when you stack them all on top of each other they look like a single image, but it's really a composite, and if you don't like the way his arm looks you can remove that layer, you can move it, etc, without affecting any of the other layers at all. It's a powerful tool, and I'd not recommend skinning without using layers.