Clipping Masks
You can use the content of a layer to mask the layers above it. The transparent pixels of the bottom or base layer mask the content of layers above it that are part of a clipping mask. The content of the base layer clips (reveals), the content of the layers above it in the clipping mask.

Clipping mask with Potatoes and Logo layers

You can use multiple layers in a clipping mask, but they must be successive layers. The name of the base layer in the mask is underlined, and the thumbnails for the overlying layers are indented. The overlying layers display a clipping mask icon.

The Blend Clipped Layers As Group option in the Layer Style dialog box determines whether the blending mode of the base affects the whole group or just the base.

SOURCE: PHOTOSHOP ONLINE HELP

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