Rasterize Layer

Hi @MahaB82A! Thank you for reaching out I'll try to explain what's going on. Photoshop treats Shapes and Pixels differently. When you use the "Step and Repeat" shortcut on a Shape layer, Photoshop keeps all the new copies inside that same layer to keep the file organized as a single vector object. However, Rasterized layers (pixels) don't have this "grouping" ability, so Photoshop is forced to create a brand-new layer for every copy it generates. If you want separate layers without losing quality, simply Convert to Smart Object before using the shortcut.