"the problem is the image took up the entire canvas."
To resolve this, scale the image down. If you are placing it using File > Place and the image is larger than the canvas, it will automatically be scaled down to fit within the canvas bounds. However, if you have a smaller image with a mismatched resolution, Photoshop may silently increase the resolution in the background, which can lead to upscaling without any prompts. Therefore, after placing image or confirming their placement, double-click the Smart Object layer to edit the content and navigate to Image > Image Size. Turn off Resample, then adjust the resolution to match that of the parent document. Confirm and save to return to the parent document. Transform the Smart Object layer to the dimensions you need.
Additionally, you can change the resolution of the files you are placing to match the document resolution or, as previously mentioned, open the files you are placing and then copy and paste them.
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