https://itch.io/t/5369064/layers-are-unintuitive-and-badly-implemented-any-help
This is the thread where the dev went in-depth on layer order.
The basic idea is that it's all relative and in a tree, rather than absolute in a list the way krita or similar art programs use, so keeping everything at 0 should stack each child sprite one layer above its parent, while lowering the child's Z-order would stack it below.