Seems the display of entities is tied to the order in which the entities are created. If I have three layers and I want layer 1 to display on top but some entities are created later on layer 3, the layer three entities are displayed. Is it possible to select which layer is displayed on top?
No, layers have nothing to do with the order in which entities are displayed. However, you can move single entities or whole layers to the back / front with the appropriate modification tool "Send to Back" or "Send to Front".