Digital (droplet) microfluidics (DµF) is a powerful platform for automated lab-on-a-chip procedures, ranging from quantitative bioassays such as RT-qPCR to complete mammalian cell culturing. The simple MEMS processing protocols typically employed to fabricate DµF devices limit their functionality to two dimensions, and hence constrain the applications for which these devices can be used. This paper describes the integration of vertical functionality into a DµF platform by stacking two planar digital microfluidic devices, altering the electrode fabrication process, and incorporating channels for reversibly translating droplets between layers. Vertical droplet movement was modeled to advance the device design, and three applications that were previously unachievable using a conventional format are demonstrated: (1) solutions of calcium dichloride and sodium alginate were vertically mixed to produce a hydrogel with a radially symmetric gradient in crosslink density; (2) a calcium alginate hydrogel was formed within the through-well to create a particle sieve for filtering suspensions passed from one layer to the next; and (3) a cell spheroid formed using an on-chip hanging-drop was retrieved for use in downstream processing. The general capability of vertically delivering droplets between multiple stacked levels represents a processing innovation that increases DµF functionality and has many potential applications.