To have transparency the layer needs to have an "alpha channel" (in addition to the three R/G/B color channels). You can make sure there is one using Layer ➤ Transparency ➤ Add alpha channel (if it is grayed out it is already there). Another way to spot this is that layers without an alpha channel have their name in boldface in the Layers list.
When a layer is transparent you see whatever layers are under it in the layer stack, and if there are no layers you see the canvas background (usually a checkerboard pattern)
When a layer is transparent you see whatever layers are under it in the layer stack, and if there are no layers you see the canvas background (usually a checkerboard pattern)