I've read the whole thread of comments and I'm really confused. For context I'm a long time GIMP user and used Photoshop a few times at a very basic level.

Layers having boundaries feels... obvious to me? Like, when I scale a layer, the boundaries are what I'll be scaling. When I crop a layer, I'm cropping the boundaries. If I have a large image and insert a small icon in the middle, should the icon's layer take the full size of the canvas? What exactly is supposed to happen if I insert an image that's larger than the canvas?

A layer in GIMP having boundaries is equivalent, to me, to a shape in Inkscape having a size.