(That blog post is here: http://tally-art.blogspot.com/2010/11/itll-all-get-better-in-time.html)

It sounds like you mean the 'flats' layer? 'Flats' is for basic coloring, just defining areas with flat colors (no shading, no gradation, no texture) so that I can go in and easily select, say, the girl's hair or the wood. If I color all of her skin the same single color with the pencil tool, I can select it with a single click. It just simplifies the process of correcting the colors if I want to later. So, you see how the reindeer was originally all dark brown? Because it was all colored with that single color, all I had to do to change it was 'select' that brown and color the reindeer shape on a new layer.