Layer Masks have a lot of power in PhotoShop. They are used to block out (or mask) certain parts of layers so that other layers can be shown in only certain areas of the document. What's great about layer masks is that they are not destructive - they can be undone and changed, as opposed to erasing parts of your image.

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In this example, we will show how we can simply add a mask to a layer, and what we can do with it. We will start with this stock image:

We will duplicate this layer and then modify the duplicate, then merge the two layers together with a layer mask. So right-click the layer you want to work with and choose Duplicate Layer.. Then with the new layer selected, goto Filter > Sketch > Graphic Pen. Play with the settings until you are satisfied, then click Ok.
We should have something that looks like this:

Now we have two similar layers, one the original image and one we just modified. The modified one should be on top, so make sure that is selected and then click on the Add Layer Mask button
Your layers panel should now look something like this:

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This white square that is locked to this layer is the mask. White means that the layer contents are showing through, and then we can paint black onto the mask (making sure the mask is selected in the layer panel, and not the layer) to block the layer contents from showing. For example, let's choose the brush and the color black. You can press D to return your color pallette to default. Now paint on the image and see what happens. The black hides parts of the layer so that the layer below shows through. We get better blended results when we use a soft-edge brush.
Our image now looks like this:

And our layer mask looks like this:

We have successfully merged two layers together nicely.

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