donald, as far as i'm aware, layer was broken in 2.03 but is working fine in 2.04 - the only documentation i've seen is in poptones' threads - i couldn't find any mention in the cvs docs
sh0dan creates snapshots of the CVS, where the current docu is enclosed, too (as ZIP in the binaries) I've added some lines about layer, but I admit that's by far not complete (but all syntax elements are present).