A question about layer positioning

[zBernie]

I was following a tutorial which one part showed how to match the colors in a composite photo.  So you make a duplicate copy of the background, then create an average blur filter for it.  That's the reddish colored layer below.   The reddish layer here was dragged right next to the layer with the guy in with the hat on.  You can see it has a small square with a line through it.  I did not work as expected in this position (See Fig. 1).  After beating my head against a rock, I found that I had to drag the red layer to the position just below the guy in the hat.  Then it worked as expected (See Fig. 2)

Both of these look very similar, so can someone explain the difference between the red layer in Fig. 1 compared to Fig. 2?

 

Fig. 1

 

Fig. 2

[telemax]

 

 

[zBernie]

2 hours ago, telemax said:

 

 

Thanks, that clarified the difference nicely!