What is Layer 1?
To understand Layer 2, first it's important to understand Layer 1. Simply put, Layer 1 is the Ethereum blockchain itself. The majority of Ethereum dapps (decentralized applications), run on this Layer 1. Layer 1 is also known as the Settlement Layer, where transactions settle into wallets.
The Settlement Layer provides the means for anchoring transactions in a way that they are immutable, cryptographically secured and free from central authority. GameStop uses Ethereum as its Layer 1 technology.
What is Layer 2?
Layer 2 allows for large-scale Ethereum applications by handling transactions off of the main Ethereum network Layer 1 where transaction fees are a limiting factor. Layer 2 is a layer that sits on top of Layer 1, acting as an additional protocol layer. Layer 2 runs on top of Layer 1, but is separate from it. Layer 2 can be thought of as a parallel network that allows for fast and cheap transactions without having to wait for confirmation from Layer 1. That is because all transactions on Layer 2 are bundled together and settled at once, rather than being split up and confirmed one by one like they would be in Layer 1. For this reason, Layer 2 is also known as the Transaction Layer.