With clipping masks you can use the content of a layer to mask the layers above it.

Open the index.psd file located in template/psd (Note: if the opened file has the slices visible just press Ctrl+H to hide them):

In the Layer palette we have some layers that use clipping masks. You can identify them by the broken arrow showing that the layer is "included"/masked by another layer. The image below shows the main layer (the one that masks the others) and the masked layers (which have the arrow close to them)

Now let's delete the clipping mask. To do that you only have to press the Alt button and with the Alt button pressed to place your mouse pointer between the main layer and the first masked layer above it and when the Release Clipping Mask () icon will appear, click to release the clipping mask. Note that releasing the clipping mask of the first layer above the main layer will release all the other clipping masks above it.

After releasing the clipping mask the layout should look like this:

As you can see above the layout looks a little bit different from the original index.psd. The main image and the shape layers ar over the main blue draw instead of being inside its borders. To make this layout look similar with the original you can add masks to all layers that create the main image or you can create clipping masks. You'll learn how to create mask a little later but now we will use clipping masks to make all the layers over the "main draw" to be placed inside its borders.

To create clipping masks hold down Alt (Windows) or Option (Mac OS), position the pointer over the line dividing two layers in the Layers palette (the pointer changes to two overlapping circles ), and click. (for more information see Photoshop Help). You have to do the same actions like you did before to release the clipping mask already created by us, only that this time you will ad clipping mask. Note that when you add clipping masks you only add one layer (not any layer above the main layer like in releasing clipping mask) so you have to repeat the add clipping mask action for every layer you need.

The Layers palette will look like this and as you can see no layer that have applied clipping mask pass over the "main draw" borders.

Now let's create a mask. A mask is used to cover part of a layer (image or text) and to reveal the layers below. It is very important to use mask instead of just erasing parts on an image because the masks are more flexible and you can always modify them according to your needs.

Below you can see layers with masks. The white area is the visible area of the layer and the black area is the invisible area of the layer.

First of all let's delete the mask of the "main img" layer and after that recreate it.

To delete a layer mask just right click on the mask preview on the selected layer and from the menu choose Discard Layer Mask. (Note: if you choose to Disable layer mask you will only hide the layer mask so that the masked layer will be fully visible)

The "main img" layer is now fully visible (But don't forget that the clipping mask is still active so the "main img" layer is still masked by the "main draw" layer. Only the layer's mask was deleted not also the clipping mask)

So let's recreate the layer's mask. Select the "main img" layer and click on Add layer mask icon:

You'll see a white square to the right of the layer's preview in Layer palette. Being fully white means that the masked layer is 100% visible. To hide regions of that layer, to make them invisible or almost invisible you must paint with black inside the mask. So let's paint with black to recreate the mask.

Go to the Tools palette and choose the Brush tool:

Now choose a Soft round brush about 200px. Click on the arrow next to brush size preview on the tool options menu and from the Brush Preset window choose the soft round 200px brush:

Now select the "main img" layer mask clicking on its preview thumbnail:

And with the brush tool selected be sure that you have as foreground color black:

Now paint over the "main img" layer to hide part of the image. We will paint over the right side of the image to create a gradient from 100% visible to 0% visible:

Paint with black until you reach the desired effect. The layout should look like the original index.psd: