A layer effect is an effect which animates on top of your movie. You can have more than one layer effect per scene. You can even adjust a layer effect Show time and Exit time to get a layer effect to show one after another.
Layer effect is an object. You can add it into the scene by clicking on an Insert Layer Effect button at the Side Toolbar or via Insert => Layer Effect menu.
You can customize a layer effect by changing colors, adjusting speed, object counts, transparency, etc. Note that a layer effect is grouped into three different category: Portrait, Landscape and Square. When you click Type combo to select a layer effect, an appropriate category will be opened depending on your movie dimension. If you movie dimension is square, the Square category will be opened. You can always choose a different category by clicking on the category combo in the Layer effect library window.
To edit a layer effect properties, click on the layer effect object in the Timeline window (You cannot click Layer effect object from a Preview window). A Layer tab will show in the Selected Object Properties Window.
Notice that Layer object has a Name. This make it possible to target it using action. You can make clicking an object to show/hide this layer object.