how do you make a background for beat em up where you can move up and down left and right?
For a side scrolling beat em up? You can use any background and just put some (invisible) objects underneath so if the player collides with the object they can’t pass it. Like if you have a road and some shops in the far background, you want the player to be able to walk on the road but stop near the shops… You can put invisible object behind the shops so the player can’t walk past.
As @Gorguruga says, just put your obstacles in an invisible layer.
For a pseudo 3D effect, you must assign to every character / object a Z depth equal to their Y position at the screen, so characters at the bottom of the screen will be drawn over characters on the top.
Here is a pic from my game, the red boxes are impassable.