There is one more new layers feature in Photoshop CS2: Smart Objects. This is such a fundamental change to the way we work with layers that I will be looking at it in more detail in a subsequent article. Here's a quick look at the basics of using Smart Objects (and why this is such a huge change).
Imagine that you dragged a large photo into a document and then used Free Transform to scale the layer way down in size. Of course, if you decided later to scale the layer to a larger size, you would lose quality because you're scaling the pixels to a much larger size. Now imagine that you can create a layer that lets you scale up and down without losing quality—that's a Smart Object.
You create a Smart Object by placing a Photoshop document into a Photoshop document (I know it sounds strange, but trust me on this one). Even when you scale this special layer, it still "remembers" its original size, so as long as you don't scale it larger than the original size, you will not lose any quality. It's a very exciting new way of working with layers with lots and lots of possibilities that I'll explore in "part 2" of this article.