Smart Objects
Did I save the best for last? I believe I did. Smart Objects offer almost all of the advantages of groups and very few of their limitations. Like a group, Smart Objects (SOs) are containers that can hold all kinds of Photoshop layers, including groups. But they can also contain Illustrator graphics, raw image data, and other SOs. And very unlike layers or groups, you can nondestructively perform edits like applying filters and transformations that are destructive when performed on any other type of layer.
Creating Smart Objects
There are several ways to create a Smart Object: by converting one or more existing layers, or by inserting graphics from other documents (or even some other applications).
Converting
I wish this were called ...
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