Layer 1 vs Layer 2
A Layer 1 is a base blockchain (Bitcoin, Ethereum); a Layer 2 is a network built on top of it that processes transactions faster and cheaper, then settles back to the base layer.
In depth
Base chains prioritise security and decentralisation, which limits throughput. Layer 2s batch many transactions off-chain and post compressed proofs or summaries to Layer 1, inheriting its security while cutting fees. Arbitrum, Optimism and the Lightning Network are examples.
Why it matters
Most cheap, fast crypto transactions today happen on Layer 2s — knowing which layer you are on affects fees and withdrawal times.