Lay or lie: which one do you want?

Lay is transitive, meaning it needs a direct object: you lay something down. Lie is intransitive and takes no object: you lie down, a person lies on the couch, a town lies to the north. The test that works in the moment is to ask whether there is a thing being placed. If you can name what is being put down, use lay. If the subject is doing the reclining themselves, use lie. Chickens lay eggs, which is transitive, and you lie down for a nap, which is not.

The confusion is not your fault, because the past tenses collide. Lie becomes lay in the past tense, so yesterday I lay down is correct and yesterday I laid down is not. Lay becomes laid, so yesterday I laid the book on the table. The past participles diverge again: lie becomes lain, as in I had lain there for hours, and lay becomes laid, as in I had laid it down. So the word lay is simultaneously the present tense of one verb and the past tense of the other, which is why even careful writers check.

A useful table to hold in memory: lie, lay, lain, lying for reclining, and lay, laid, laid, laying for placing. The separate verb lie meaning to tell an untruth is regular, giving lied and lying, and never causes trouble. Note that misusing lay for lie is extremely common in speech and in song lyrics, and a strict descriptivist would point out that the distinction has been eroding for centuries and may eventually collapse. Until it does, the distinction is still enforced in edited prose, so it remains worth getting right in writing even if nobody will stop you in conversation.