What do continents "lay" on?
Matan, the continents where we all live "float" on the Earth's mantle. The continents are made out of relatively brittle rock called the "Crust" and the mantle is made out of much more ductile material. The mantle, however, is NOT liquid. It is just much more ductile than the crust so, in geologic time, it can flow (like silly putty). Also, the mantle is much more dense, so the crust doesn't sink into it by gravitational/bouyancy forces alone.



Think of it as a creme brulee. We live on the little hard crust on the top. And there just happens to be a little bit of water on that crust that covers the less-elevated parts.

Now, a little more technical, the crust that makes up the continents and the crust that is under the deep oceans are actually compositionally different. This is because the magma that solidifies to form each of these crusts travels, by partially melting its way up, through different materials and different thicknesses. The consequence of this is that the crust making up the continents is less dense than that making up the bottom of the oceans.



The image above shows the process by which we get new (left) oceanic crust, (right) continental crust, and (middle) a special type of crust like that in Hawaii. Note that when two tectonic plates collide, the more dense one will tend to subduct under the other.