Compositing
The shapes of a layer are composited together to create the final outline.
Masking
Select a path and check Mask from the Palette to subtract the path from all shapes below it. Applying a mask is a non-destructive action; the path can still be moved and modified.
Subtracting a circle from a square by applying a mask to the circle path.
The subtracted parts of paths are drawn in a light gray color, while the resulting outline is drawn in black.
Masking is based on the order of shapes, since a masking path only affects shapes below it. Change the shape order by choosing Filter → Shape Order. Drag the shapes into the desired order and confirm with OK.