Is it possible to layer stack all 13 Sentinel 2 bands or can I only layer stack those that are the same resolution (so for example the blue, green red and NIR bands). I have a very large area of interest so will have many sentinel images. In order to exploit more band combinations, it would be great to layer stack all bands for each image and then create a mosaic, but I am not sure if this is possible? Do I need to rescale the coarser bands prior to layer stacking?
Layer stacking is a process for combining multiple images into a single image. In order to do that the images should have the same extent (number of rows and number of columns), which means you will need to resample other bands which have different spatial resolution to the target resolution. In other words, all images/bands should have same spatial resolution to be able to perform layer stacking. However, combining images/bands will increase the final stacked image size, and consequently will increase the processing time later when you do your analysis. If you know that you will not use all the images/bands in your analysis, then it will be better to not stack all the images into a single image, and choose only specific images of interest. It depends on the purpose/objectives of your study.
There are two types of stacks: a new image stack and a virtual stack.
For the new image stack, you do have to resample all bands at the same resolution. This will markedly increase the size of your data. This is done from image interpreter > utilities > image stack.
With virtual stack (vsk file), you don't have that constraint. A vsk is a Erdas format and it is in fact a simple text file with the list of all files (with full path). It can be created with the "report" command.
You can also use a hybrid approach where you create image stacks for each pixel size (10,20 and 60 m), then a virtual stack of each group (see here for an example)