Layer 1 vs Layer 2 are terms used to describe different types of blockchain architectures. Layer 1 refers to the base layer of a blockchain, including its core protocol and consensus mechanisms, like Bitcoin and Ethereum. It is responsible for maintaining security and decentralization. Layer 2 solutions operate on top of Layer 1, aiming to improve scalability, speed, and reduce transaction costs. Examples of Layer 2 include the Lightning Network for Bitcoin and Optimistic Rollups for Ethereum, enhancing performance without compromising security.