Layer1 Layer2

I get real confused on this Layer1 Layer2 stuff. I’ve been holding ETH for a while in my Crypto.com DeFi wallet. How do I know if I am holding in Layer1?

As for Layer2 being the solution to lower gas fees, is Loopring Exchange an example of Layer2? Where you can move ETH & ERC20 tokens through Loopring (Layer2) and pay no ridiculous fees?

Or am I totally, utterly, completely wrong?

A brief clear up would be appreciated.