I'm using an icon_size of 16 x 16 for my game, with 32 x 32 (really 24x24, but still) player icons. this works fine. However, if i walk "behind" a tree or building, or any other icon i have that is greater than 16 x 16 in size, the player appears on top of it. Yet, if they stands one tile up from another mob, they stand behind it. I don't understand this.

Can anyone help me sort this issue? I've tried to use layers, but that makes the part that i want to stand in front of appear on top of the player.
Well you probably need to split the object into 2 pieces & make one the higher layer so u can appear below it then & the other a lower layer so u can appear above it.

There is no way to tell BYOND to layer a part of the icon differently than any other part of the icon.

You could use a different map type but then all the pieces become seperated from one another & changes to one doesn't affect the other, which would be like you put them all in seperately, this could work for you possibly then you could edit the layer of each piece seperately in the map editor, but whatever you decide just remember that each piece will become seperate so if you want to edit them you have to edit every piece individually.