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First you need to know something about what a layer mask is.
A layer mask describes a layer's transparency using black as 100% transparent, and white as 100% visible.

Well, this is easier to understand if you have got an example. Just follow these few easy steps.
Step1:

Create a new picture, with about 500x500 pixels in size with white background.
Then create a new layer, with some other color. I used a dark blue.
Name the blue layer "deep blue". If everything was correct, your layers dialog, should look like mine on the right.
step1
   
Step 2:

Now, add a layer mask, to the deep blue layer.
To do this, just right-click on the deep blue layer, and select "Add Layer Mask" from the dialog.

Another dialog will pop up, and ask you, if you want the mask "White" or "Black" or "Layer's Alpha Channel"
Select "White" and click on OK. White means that the deep blue layer will stay completely visible. Cause white on a layer mask means no transparency.

Now youshould have a layer dialog that looks similar to the one on the right.
step2
step2 final
   
Step 3:

Once you created the mask, you are almost done.

Choose a big, fuzzy brush, and select the airbrush tool. Use black as foreground color, and start painting directly _on_ the layer mask you just created.

You will notice that everything you paint gets more translucent.
If you paint it completely black, you have 100% translucency, while the white spots let the layer appear 100% visible.

You can use gradiants, brushes, almost every tool you can find in the tool-box to work on the layer mask.

The only thing you have to think of is: It has to be a black, white or greyscale tone, otherwise it will be converted to greyscale.

The picture on the right, uses a black <-> white gradient on the layer mask.
step3
   
Finally it looks like this one
final