Rasterize Layer

can someone explain in simple terms what rasterize really does?

You cannot use the painting tools or filters on layers that contain vector data (such as type layers, shape layers, and vector masks) and generated data (such as fill layers). However, you can rasterize these layers to convert their contents into a flat, raster image. Then you can use painting tools and filters on the layer

There is also an equivalent function: create layers, that will create raster (pixel-based) layers out of the layer styles of a given layer.