Sam covered everything with an excellent tutorial. I just have to share this courtesy of an old work project I had years ago. I used this in a presentation to the client.
I'll describe this procedure as "flexible" as you could move the magnifier as well as reposition or enlarge the "magnified" area. This enables you to select any area to magnify within the image as you wish.
1. Open the image you wish to add the effect.
2. On a second layer, create your magnifier lens. I used a real magnifier, but it's your choice....
3. With the elliptical selection tool, select the magnifier lens area only, create a new layer above and fill white. Group this with magnifier layer.
4. Duplicate the background image. Move/position this as the topmost layer. Press CTRL+T and enlarge the image as you wish. In the psd below, I cropped the image. You don't have to.
5. Clip this layer with the layer below. ALT+click the border line between the image and white filled lens layer.
To use, select the magnifier layer and move it around in the canvass to "magnify" the background image. Select the duplicate (topmost) image layer to reposition the magnified area directly in line with the magnifier lens and the original BG image or to enlarge ("increase magnification") as desired.
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This is not the actual work project file but the test file to try the effect (in theory at the time...lol). Here's the test psd in it's old glory (created in a much earlier version of PS but can be opened with later versions).
Enjoy....
