Lay means to place or to put something; it requires a direct object.
- Where are you going to lay that book?
- I am laying the book on the kitchen counter.
- He laid the book on the kitchen counter.
Lie means to be in a horizontal position; it never takes an object.
- The baseball lies in the street next to the car.
- The baseball is lying by the car.
- How long has the baseball lain in the street?