Photoshop's type layers
As long as type remains part of a type layer, it remains editable.
You can return to the type layer at any time and make changes
to the character and paragraph characteristics, or edit the text
itself. After the layer is rasterized or merged or the image is
flattened, the type can no longer be edited as type. (You can,
of course, edit the pixels, but you cannot, for example, highlight
a word with the Type tool and overtype to correct a spelling error.)
In many ways, type layers are comparable to other
non-background layers. Layer styles can be applied, type layers
can be moved in the Layers palette, they can become part of a
layer set, and adjustment layers can be applied. The Layers palette
indicates what effects and adjustments have been applied to the
type layers.

A type layer is always indicated by the letter
T in place of a layer thumbnail in the Layers palette. Like other
layers, you can click on the layer's name and rename it. (By default,
Photoshop names a type layer using the first characters of the
layer's content.) You can change the blending mode and opacity
of a type layer and create layer-based slices from type layers.
Unlike other non-background layers, you cannot
add pixels to a type layer. You cannot paint on a type layer,
nor can you stroke or fill a selection. The adjustment tools (Blur,
Sharpen, Dodge, Burn, Sponge, Smudge) cannot be used on type layers.
Anti-Aliasing
Anti-aliasing is the process of adding transitional pixels along
edges to soften the appearance of curves and diagonal lines. Because
pixels are square, their corners stick out along curves, creating
a jagged appearance – known as, of course, "the jaggies."
(Anti-aliasing isn't required for vertical or horizontal lines
because the edged of the pixels align.) These pixels are added
in intermediary colors between the subject and the background
colors. It is used with selection tools as well as type. Selection
tools offer the option of anti-aliasing or not, but Photoshop's
type engine is more sophisticated, offering several levels of
anti-aliasing. Because the appearance of type is usually critical,
and because different fonts and type sizes have different requirements,
Photoshop's type engine offers Sharp, Crisp, Strong, Smooth, and
None as anti-aliasing options.
Anti-aliasing makes curves and angled lines appear
smoother by adding colored pixels along edges. Think of the transitional
pixels as a mini gradient, blending from the foreground color
to the background color. When you look at black type on a white
background, the added pixels are shades of gray.

The number 3 has no anti-aliasing applied, but
the letter S is set to Crisp. The inset is at 100%, and the image
behind is at 800% zoom.
At 100% zoom, the jagged edges of the character
without anti-aliasing are visible. With Crisp anti-aliasing, the
curves appear smoother.
The colors used for the transitional pixels depend
on the colors of the type and the background. For example, if
the type is yellow (RGB 255/255/0) and placed on a background
that's blue (0/0/255), the transitional pixel colors could include
(among others) RGB 80/80/175, 224/224/31, 192/192/63, and 144/144/111.

The differences among the four type anti-aliasing
options are subtle. Even when zoomed to 1200%, it takes a close
look to see variations. The top row shows Sharp and Crisp, and
the bottom shows Strong and Smooth.

In this particular example, the area of greatest
variation is the left edge of the letter O. The Strong anti-aliasing
(bottom left) is substantially darker than the others. Sharp (top
left) and Smooth (bottom right) are nearly identical in both placement
and coloring of the transitional pixels.
Keep in mind that anti-aliasing is not always a
good idea. Very small type can become quite blurry onscreen when
antialiased. Especially when preparing images for the Web, think
carefully about anti-aliasing. Using larger type, particularly
the more linear sans serif fonts, such as Arial, can do far more
to approve legibility and appearance than anti-aliasing. In addition,
if the image is to be saved as a GIF or PNG-8 file, remember that
anti-aliasing introduces several new colors to the color table,
potentially increasing file size. Remember, too, that anti-aliasing
is not used when you print vector type to a PostScript printer.