Oh, this is good stuff my friend.  Each layer has the option of adding some cool effects and with all of the tweaking options available you can still create effects that no one else has come up with!

You can add such things as drop shadows, outer glow, bevel and emboss, satin, gradient overlay and more!  Add instant professionalism to your text.  You'll get a feel for what will work and what won't (after you get comfortable with the options).  For example, lets say you have a layer of a farmhouse, it will look out of place to just give it a gradient overlay in the middle of the rest of a "natural looking" bitmap image. 

Layer effects work great for text but you can also use them for some 'normal layers'.  I sometimes use outer glow and drop shadow on some "people" layers to make them stand out from the rest of the image.  I'll also add drop shadows and stroke (or outer glow) to transformed rectangular layers to make them appear as pictures within a picture (see the Basic Photoshop or Photoshop Designer DVD Packaging).  Here is an example of some layer effects in action.  This should give you an idea of what you can do...Note the distance on the drop shadow.

Right click on the layer in the layers palette to bring up "Blending Options".  You can also click on the lower left icon in the layers palette to choose which layer effect you want to go straight to.  You now have many options available.  The master blending options default is where you can change the opacity (now on the layers palette itself in Photoshop 7 & CS).  You can choose your layer effects (drop shadow, inner glow, stroke, etc.). 

You even can choose layer styles.  This allows you to create a preset 'style' across the entire layer.  You can easily use styles to create "buttons" for the web (for example).  If you're new, get very comfortable with the different layer effects that you can create.  You can change the opacity and blending modes on many of them, change the angle, depth, etc.

Note: Click off 'global light' if you want to change the angle of a drop shadow (ie.) and for it just to apply to that specific layer, otherwise with global light clicked 'on' it will change the angle of all layers that have that effect on.  You can also drag layer effects directly to other layers.  To do this, make sure you have the effects 'opened' with the arrow down and select the layer effect and drag it to another layer.  You have to drag it to the point right under the layer (the line between layers) to allow it to 'drop in'.  Try it out.  Get the hot Photoshop Designer Training here with all kinds of goodies.

- Orion Williams copyright 2004