Basically if you think about, the grey thing in painting terms is call the underpainting. Its purpose is to eliminate the white, and seperate to shapes. It also helps with values for your colors, because with the greyscale in place, all you have to do is add color to it. Then its straight on coloring, which can be done in various ways, but Friendly hand is probably the fastest and easiest way.
Hi, If you save it as a PSD you shouldn't have to merge the layers. If you are using GIMP save it in the Gimp format whatever that is. Same thing for most art applications- use the native format to preserve layers.
Looks to me like he starts by adding a new layer and then using a fill in "hue" or "color" or "overlay" mode with that orange color. Then uses a soft paint brush in the same mode to apply the other colors.
Some youtube tutorials have voice overs that explain similar techniques: [link]