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this is driving me nuts. Not sure what I did.
I was happily erasing an image to make the background transparent using a mixture of the magic wand and eraser. All off a sudden, the magic wand and the eraser are now replacing the once deleted background. 
As you can see in the screenshot....I have the eraser selected but instead of erasing the keychain....it is now restoring the background.
How do I change it back???
You are erasing portions of a layer mask, rather than the layer itself. The icon to the right of the layer thumbnail is a mask that is applied to the layer. This is a non-destructive way to hide parts of the layer. To change it back, use a brush in stead of the eraser tool, and paint over the areas of the mask that you want to hide or show. The color you use to paint on a mask will determine what is visible "through" the mask. White areas in the mask are transparent and show the layer. Black areas hide the layer. Grays are semitransparent.
If you really want to erase part of the layer image, select the layer thumbnail instead of the mask thumbnail.
*Edit: Upon second look, the layer you're working with appears to be a smart object, so you can't erase any pixels in that layer until you rasterize it.
You are trying to edit a smart object. Eraser will not affect it. Smart objects are made to keep the pixels intact during geometric transformations and filterings. Colorings and other pixel edits are not allowed. But, as already told by others, you are editing the layer mask.
A normal layer can be converted to smart object. If you paste something to Photoshop from other programs, you often get smart objects. You must rasterize smart objects if you want to edit their pixels. Or you must open them for edits as a separate image.
In your case I recommend you to click undo and paint more black to the layer mask to cover more of the image.
Useful reading in Photoshop's manual:
