Congratulations: you have now deployed a layer mask, and by deploying the gradient; a) added BLACK, which masks (or hides) portions of the layer image, and b) added WHITE, which unmasks (or reveals) portions of the layer image.
Our next series of steps will modify the BLACKS and WHITES of the layer mask to fine-tune the amount of layer image which is revealed.
Since our image of the girls is not a true circle, the gradient is masking too much of their faces. We want to open that mask up so that their true colors and details shine through.
Close diagram #3 and OPEN DIAGRAM #4 NOW
Remember that anywhere we add WHITE, we'll be showing more image, and anywhere we put BLACK will mask or hide more image. Our gradient mask demonstrates this (#5)
#6 Selecting an area: Using the Lasso Tool (#6), you'll be selecting the area to modify.
#7 Set the Lasso Options to "Anti Alias" (for a smooth selection); and add Feathering to make a smooth masking transition from masked to non-masked. Here we set the feather to 10.
#8 Make the Lasso Selection... We drew a rough selection around the portions of the faces to be modified.
#9 Set foreground color to WHITE, and
Hit: Option/Delete (PC: Alt/Delete) to fill the selection with white.
TIP: We intentionally set the feather to a low number knowing that we can always increase it, but not decrease it without undoing and starting over. NOTE that you can Option/Delete again, and the feathered area will increase -- spreading the reveal further into the black mask. (Watching the layer mask carefully, hit the Option/Delete again and watch the white area of the mask grow.)
Close diagram #4 and OPEN DIAGRAM #5 NOW
Our feathered spread of the deployed mask above has grown too far, and is now encroaching on the background image. Since we want the cat to remain nice and clear, we now need to paint some BLACK into the Layer Mask to make a more clear separation.
#10 Painting in the Mask: Now tap the letter B, or select the Brush from your tool box. (#10)
Move your brush over into the image area and you'll see a faint circle of the brush's "footprint" ---
Using the pull-down Brushes menu, select a SOFT edged, round brush, and Adjust the SIZE of the brush in the Options Bar (#11) so that it covers a swath of the image you wish to re-mask.
#12 Black Paint: Tap the letter D to reset to default BLACK as the foreground color.
#13 Begin painting to modify the mask. We're moving the brush up and down through the areas which separate the images -- yellow arrows. (#13)
#14 Masking with Black: watch the Layer Mask and you'll see the portion of the gradient begin to be colored in black. Moving along the right edge of the Cat now reveals the cat while keeping a nice, soft transition to the girls.
This completes the process.

At this point, you would save the file, then save the flattened version for the next use -- printing, the web, or what ever.
Key Concepts
The Layer Mask allows you to show or hide portions of the layer
Putting BLACK into the mask, hides image
Putting WHITE into the mask, reveals or shows image.
And that's all there is to it.
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from the Editor:
I was delighted that day back in 1989 when Peggy Killburn called to ask if I could handle one more speaker in my "Great Graphics Tips & Tricks" session scheduled for the 1990 Macworld Expo. "Yes" was my response to her request to add Russell Brown to my panel. After all, we loved Adobe's young "Illustrator" program, and were quite anxious to try out their upcoming new product called "Photoshop." After seeing his demo, I was convinced Photoshop would be big. So the next month we added "Photoshop Tips & Tricks" to our regular DTG Magazine uploads to Compuserve, GEnie and AOL. The rest is history.
I only regret that I didn't trademark the name.
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Editor / Publisher: Photoshop Tips & Tricks, DTG Magazine.