Yes, you go through the Gatun Locks and from there to excursions - tender to land, then bus, then I highly recommend the ferry for a whole different perspective of the locks and go through the other 2 locks and all the way over to the Pacific Ocean.
As to the lay over - it's in Cristobal where they have a very large flea market, native dancers and some duty free shops while the ship is waiting for those that went on excursions to rejoin them.
I'll be on my 6th cruise doing this in November - 4th on the Coral and 2nd on the Island
Highly recommend this cruise.