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This option allows you to move an object in the stack down only one layer. The layers effected by the move will automatically shift to their appropriate layer.
Each object is an entire layer across the canvas. One object might look like it is directly on top of another object but their layer numbers might be more than one layer apart.
Also, grouped objects are on the same layer.
How to lower an object one layer
Example

In this selection, the triangle was selected and Lower applied.