Title^
Simply layers of different materials.
For instance painted metal; when the paint starts to come off at spots, you can see the metal and maybe some rust underneath the paint. Actually everything that is painted is a layered material. Or if you spill some oil on the floor or so.
Does that help?
Yeah as Martin says, it is no more and no less like in real life. When you have a cement wall and you paint it over with white paint, then two years later you paint it blue even though your wife wanted pink, that's a layered material that you try to emulate in Blender with the shaders. When Tony Stark has his Iron Man suit all in metal and he paints is with hot rod red, he is layering a paint coat on top of the metal. So yeah, same as in real life, no tricks or math.