In this basic mask tutorial, we'll make a pop art poster image, using a mask made from this photo of one of my cats:
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| Contents of lower layer | Contents of upper layer |
Now, with the upper layer still the active layer, choose Layers > New Mask Layer > From Image. For 'Source window', choose the image that you want for the basis of your mask (m-cat1.jpg here). Be sure that 'Source luminance' is selected under 'Create mask from'.

When you click OK, a new layer group is created that includes the previous topmost layer with your new mask layer above:

The mask makes some areas of the layer look opaque, some transparent, and some semi-transparent. The result you see in your image will be something like this:

Used in this way, a mask layer can be thought of as "acid" that eats away at the nontransparent areas of a lower layer in the mask's layer group, letting the contents of lower layers outside the layer group show through. (Masks are much more versatile than acid, though, since the layer beneath the mask isn't really changed. The mask just makes some areas of the lower layer appear to be transparent or semi-transparent. So maybe a better way to think of a mask used in this way is as some sort of magical invisibility paint.)
If you like, you can now merge all the layers by right-clicking the Layer button of one of the layers on the Layer palette and choosing Merge > Merge All (flatten). This merges all of the layers together, forming a new Background layer.
You can then apply any other effects you want. I used Effects > Artistic Effects > Posterize to get a pop-art effect:

Note: You can save the file without merging the layers, but if you don't merge the layers, any effects that you apply before saving will affect only the active layer. If you save the file in a format that supports layers (PSP or PSD), then the layers (including the mask) will be preserved and will be available for editing later on. If you save to another format, such as GIF or JPEG, all of the layers will automatically be merged together.
Copyright ©2003 Lori J. Davis
All rights reserved
(This is an adaptation of a tutorial written in 1998 for PSP5.)