#5 - Add a photo
To add a Webshots photo to one of your playlists, click the + icon underneath the photo thumbnail. A dialog opens showing all of your playlists; pick one and click "Add to Playlist".
If you have several photos selected (Shift-click or Ctrl/Cmd-click to multi-select), Add to Playlist will add all of them at once.

A playlist can hold up to 500 photos. The newest additions appear at the top. If a playlist is already at the 500 limit, the oldest photos won't be shown until you remove some.