I couldn't see the layer stack in the video as it is too small but I figured out how to go full screen (yay me, I learned a new tech thing today - I'm very tech illiterate) and I think the problem is with the layer of 50% gray. The 50% does not refer to 50% opacity but to true neutral solid gray of 128, 128, 128 (where black is 0, 0, 0 and white is 255, 255, 255). The next step is to set the blend mode of that layer to hard mix - you only get that blend mode with Photoshop CS and up; PS7 and below do not have it. Then you put an empty layer underneath the gray layer and use low-opacity or low-flow airbrushes to define your land (don't use soft round brushes or hard round brushes as they will create an edge while an airbrush has an edge that fades out completely).