To lie is to place oneself in a flat, prone, or horizontal position. Just to make things more confusing, the past tense is lay. I lie in bed every morning and listen to the birds singing. The sergeant told the wounded soldier to lie quietly until help arrived. She lay down early that night.
To lay is to place something in a (horizontal) position or cause someone (a baby, for example) to lie down. The past tense is laid. He lays the garden hose next to the house. The mother lays her baby in the crib. The duck laid its eggs right next to the dormitory.