When you create blocks (also called symbols) to insert into a drawing, you need to consider what layer to use for the components that make up the blocks. Your choice depends on the results you want and you have four choices:
Component Properties
Insertion Results
On any layer (except 0); color, linetype & lineweight set to ByLayer
Block keeps properties of that layer. AutoCAD creates the layer if necessary when you insert it into another drawing. If the layer exists in the drawing but has other properties, the block takes on the properties of the layer in that drawing. If you insert the block on a different layer, it keeps its original properties, but is reported (in Properties window) as being on the insertion layer.
On any layer (including 0); color, linetype & lineweight set explicitly
Block keeps color, linetype & lineweight that were set. AutoCAD creates the layer is necessary when you insert it into another drawing.
On any layer (except 0); color & linetype set to ByBlock
Block takes on the layer and properties of current layer. AutoCAD creates the layer as necessary when you insert it into another drawing.
On layer 0; color, linetype & lineweight set to ByLayer or ByBlock
Block takes on the layer and properties of the current layer.
No new layers are created.
Al Pfennig wrote in this tip: "When creating symbols for inserting into a drawing when the same symbol may be inserted on more than one layer, create the symbol on the zero (0) layer and have color, linetype and linewidth set to ByLayer. This will allow the symbol to take on the characteristics of the layer on which it will be inserted."
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