What does a layer with a special arrow in front mean?

It's not a group layer with a folder icon if that was your first thought, it's an inset layer with a downwards pointing arrow in front of it above a dominant normal (not inset) layer. But how do you make these special layers? what do they do or mean exactly? what are they even referred as for that matter?

I enclosed a screenshot of a file I saw this on and if you look in the layers window on the right you'll see what I'm talking about. I have spent far too long trying to figure out how to do that, or at least figure out what it indicates. I even looked through my CS3 photoshop bible only to see zero mentioning of this.
Has anyone here worked with these before?
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The arrow means that the inset layer is a clipping mask connected to the layer beneath it.
Looking at your layers panel, you've got a lot going on there and those clipping masks appear to be improperly used.
Here's a quick way to understand how to create a clipping mask and see what it's doing.
  1. Make a new Photoshop document, say 500px X 500px.
  2. Click the "Create New Layer" button on your layers panel to make a blank layer.
  3. Using the Rectangle tool, draw a rectangle that is big enough to see but not all the way out to the borders of your document.
  4. Click "Create New Layer" to put a new blank layer on top.
  5. Grab the Gradient tool, set the colors of the gradient to something really splashy... maybe one of the preset gradients like "Violet Green Orange", make sure the opacity (in the options bar) is set to 100%, and drag across the document. You'll no longer be able to see your rectangle because the gradient completely covers it.
  6. Now turn the upper (gradient) layer into a clipping mask. The long way is to right click on the upper layer's thumbnail in the layers panel and click "Create Clipping Mask." A shortcut is to hover your cursor at the spot in the layers panel where the two layer thumbnails touch, push the Alt key so your cursor turns into interlocking circles, then click.
  7. Now you can see what happened: the gradient is being clipped by the boundaries of the layer beneath it. The rest of the gradient isn't showing. (It's still there, and if you ever need to go back to seeing the whole layer, just right click on the clipping mask layer and hit "Release Clipping Mask.")
As I said, it looks like the document you posted isn't using these clipping masks properly. You've got a log going on in there and most of it seems unnecessary. Hopefully, now that you know what the arrows mean, you can clean that up a little.
Hope this helps.
StevenDesignerAuthor Commented:
Wow, I didn't expect such a good answer honestly. You explained it perfectly and even included the key shortcut that I have been trying to remember for the past 2 years. By the way, you're right about that file layering being ugly as sin, it's a file a past employee started on and now is passed onto me..and of course my boss has nothing better to do with his time than make sure I'm not wasting an extra minute of mine.
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