I need some help here, can anyone tell me what the highlighted thing is called and what does it do? I was following a photoshop tutorial but got stumped at this part because I actually use krita and can't find this by the icon alone

It's a clipping mask. You can use shapes to mask around other layers.

>>460303
Thanks, turns out krita doesn't have that feature (or is hidden under some other name and hotkeys). It works just as you said in photopea tho.