How do blend modes affect groups?
Blend modes work differently depending on whether they’re used with groups or layers. One blend mode—Pass Through—is available only for groups.
When a group is set to Pass Through (the default blend mode for groups), each layer in the group is blended with all layers and groups that appear underneath it in the Layers list—including layers in other groups. In the following example, the Swirls layer is set to Stencil Luma, and the Fishes layer is set to Add.
With the enclosing group set to Pass Through, the Swirls layer stencils all other layers underneath it, including the Gradient layer in the bottom group. The result is that all layers are stenciled against the background color. The Fishes layer is likewise added to the combined stack of layers.
When a group is set to Normal, the layers nested in that group are blended with layers underneath them in the same Group. Layers nested in the group do not blend with layers in other groups beneath them in the Layers list. In the following example, the Fishes and Swirls layers in the topmost group are blended only with themselves when the topmost group is set to Normal.
The Gradient layer in the bottom group is left unaffected, although the transparency in the top group caused by the combination of the Add and Stencil Luma blend modes reveals the gradient in the background.
Other blend modes
When you set a group to any other available blend mode, the following happens:
The layers in that group are blended according their own blend modes.
The resulting composite of all layers in that group is then blended with other groups lower in the Layers list, according to the selected blend mode for the original group.
In the example cited above, when the topmost group is set to Multiply, the composite of the Added Fishes and the Stenciled Swirls layers is multiplied with the Gradient layer in the bottommost group.