Layer distortions modify the shape layers. Most layer distortions can only operate on text or vector layers. To be exact at the moment there is only one layer distortion that can operate on images, too: the outline warping (see chapter 7.8.34).
Similar to layer styles (see chapter 2.5) the layer itself keeps unchanged. Only the appearance of the layer changes.
Layer distortions can be applied on groups, too. In this case they affect all layers inside the group.
You can delete Layer Distortions by using the Layer Attributes dialog (see chapter 4.11).