The Layer Manager (accessible through the 4-lines-below-each-other button)
provides the following:

 - Naming of layers
 - Automatic naming
 - Visualization of state through the use of colors
 - (De)Selection of all objects on a layer
 - Locking of layers (make things unselectable)
 - Always render a layer
 - Never turn on a layer with `KEY
 - Clipping ranges per Layer (can be used for LOD)

 
ARRANGEMENT:

 - Buttons are arranged similarly to the layer buttons in the 3d view
   header, in groups of 5.


CONTROLS (from left to right):

 - Lasso: Select only objects on this layer (SHIFT to add/substract from
   selection)
   
 - Arrow: Move selected objects to this layer (SHIFT to add/substract from
   layer mask)
   
 - Lock: When this is activated, objects cannot be selected anymore
   if they are at least on this layer. Any such objects which are already
   selected will get deselected.
   
 - RenderAlways (/R\): If this is activated, objects that are at least on
   this layer will *always* be rendered, no matter if this Layer is turned
   on or off in the scene.
   
   Useful for lights.
   
 - NoAll: This can be used to exclude a layer from `KEY (Turn on all layers).
   Objects that are in the way (BevObs, pre-radiosity meshes, etc.) are often
   moved to an unused layer. When you now turn on all layers with `KEY (for
   example, for rendering), these particular layers will still stay off.
   
 - LOD (Grid Icon): When this is turned on, objects will only appear in render
   (and in 3d view, if the "LOD" toggle is turned on in the 3d view header) if
   their distance from the camera (or 3d viewpoint) falls between the two
   values set in the range buttons which appear on the right side of the layer
   name.
   
   This can be used for LOD: Create different versions of an object with different
   levels of detail (for example, different subsurf levels), and distribute them
   among several layers. Set their LOD values to 0-100, 101-200, 201-300 etc.

 - Name field: Click to type/change the Layer name. If this field is left empty,
   Blender will automatically assign a name to the layer and keep it updated (the
   Names of objects in this Layer are automatically filled in). 
   
   As soon as you change the name manually for the first time, automatic naming
   will be disabled.
   
   Should the Layer become empty, its name field will be cleared, and automatic
   naming will start again.   


COLORS (referring to default theme!):

 - Grey: Layer is empty
 - Dark blue: Layer contains objects
 - Light blue: Layer contains selected/active object(s)
 - Grey-Blue (buttonsrow before the name): layer is the active layer in the
   current 3d view