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A composition is the framework for a movie. Each composition has its own timeline. A typical composition includes multiple layers that represent components such as video and audio footage items, animated text and vector graphics, still images, and lights. You add a footage item to a composition by creating a layer for which the footage item is the source. You then arrange layers within a composition in space and time, and composite using transparency features to determine which parts of underlying layers show through the layers stacked on top of them.
Source: adobe.com and www.creativecow.net