Blending modes are a little difficult to explain. Basically, when one layer is above the other, the computer uses a bit of programming to decide how the combination of both layers will look.
Blending modes can not just apply to Layers, but also to individual strokes.
Let's start explaining with the Normal Blending mode: As you may have guessed this is the default Blending mode for all layers.
In this mode, the computer checks on the upper layer how transparent a pixel is, which colour it is, and then mixes the colour of the upper layer with the lower layer measured by transparency.