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How do you place a layer inside a layer?

Please read first before assuming this is a really simple question.

I saw my instructor do it at college and I did it once or twice myself, although it may have been CS2 and not CS3. It ihad something to do with dragging a layer into the thin slit between layers,  above the layer you wished to add it to.
If successful,  it wouldn't shuffle the layer order, instead you would now have one image shown through the other on the same layer, which means it may have meant my instructor made a selection first, but still, I can't figure out how to do that drag technique of adding one layer inside another like that and it likely involved holding down a key too for all I know. I don't believe a layer mask was involved either from what I remember and I can't remember if the added image was even editable after that.

This may all have something to do with the "paste into" feature as well, but I'd like to learn the  above mentioned trick in case it is different.

Thanks for your time, I understand there's other ways of achieving this effect but this would be faster than all of them if I could just figure out how that was done again.
1 Solution
I am not sure about the dragging method. But it sounds like you want a clipping mask. Try this and see if is what you want and if it is quick enough for you.

Place the layer you want to see through (i.e. text, or graphic) above the layer you want to see (i.e. photo) then right click on the top layer (the one you want to see) and click "Create Clipping Mask"

See the attached photos as example what what the result should look like and what the layes panel should look like.

That should do it. I hope that was what you were looking for. If not maybe I can make another suggestion.
StevenDesignerAuthor Commented:
Thanks so much, this achieves the exact same effect so this must be what I remembered. Including a picture file was pure genius too.
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