Create a new document of intended size (e.g. this one is 1238 px width by 812 px Height). The background layer is flattened and does not support transparency so create a new layer by clicking the New Layer button marked here.
Skip to further down if you already know how to create a fill and text layer
You might want to rename the new layer (double-click layer title)
Depending on how large you want the fill layer to be, open the Swatches panel (Window>Swatches) and select the colour you want to use
or double-click the foreground colour and choose the colour that way and click OK
If you want to fill the whole canvas (that’s the area you create artwork on) press Alt+Backspace on your keyboard.
If you only want to fill a smaller area, press M on your keyboard, drag out a square/rectangular area you want to select and Alt+Backspace to fill
Tip: To fill it with your background colour press Ctrl+Backspace instead
If using the selection method, press Ctrl+D to deselect
Then press T for a text layer and click on the filled area and type the word you want to overlay
To adjust the transparency of layers, select the Opacity feature down-arrow in the Layers panel and use the slider to adjust the opacity (transparency) of the target layer. Alternatively select the number and type in a figure. You can also quickly set opacity by typing in the number while the layer is selected e.g. 50 = 50%, 5 = 5%, 0 = 100%, 00 = 0%). This works for all layers including text and fill as long as the layer is not flattened
You can’t make the background layer translucent, either hide it by clicking the eye 👁 or right-click and Layer from Background.
Originally in response (by me) to an answer on Quora.