This command converts a bitmap layer between spot-color and full-color modes. Its full name matches the current layer type.
Layer > Convert to Full Color converts a spot-color layer to full-color. The resulting layer is filled with the spot color, and is opaque where the spot-color layer was drawn on and transparent where it was blank.
If you want to convert a spot-color to a full-color layer that's entirely opaque, that goes from the frame background color to the spot color instead of from transparent to opaque, follow this command with Layer > Matte In Transparency.
Layer > Convert to Gray Spot Color converts a full-color layer to a gray spot-color layer. The resulting layer is transparent wherever the full-color layer was white or transparent, and opaque black wherever the full-color layer was dark.