How can one explain this feature of the fossil record in a creationist framework, especially from a young earth viewpoint? If life has only existed on earth for six thousand years or so, how can life forms have changed so much?
There is a very simple answer to this question. Consider the plants and animals found in temperate climates, such as in the United States. Compare them to the plants and animals found in the Amazon jungle, or in a swampy region of the United States, or in the African Savannah. There will be very few similarities. Probably very few of the birds, flowers, trees, et cetera from temperate climates will be found in the Amazon jungle. And probably very few plants and animals from the Amazon jungle will be found in the African Savannah. It is hard to believe that such different ecologies could exist at the same time on the same planet, but it is so.
This explains how the ecology in fossil layers can differ so much from that on earth today. Differences in climate and ecology explain the different kinds of organisms found in the past and today. The existence of giant insects and birds suggests that something was very different in the past. Perhaps the air pressure was higher and some past catastrophe caused much of the earth's atmosphere to be lost to space. Perhaps the composition of the atmosphere was somewhat different. In addition, the fierce dinosaurs would have made life difficult for any modern mammals, which explains their absence from fossil layers containing dinosaurs. Only some very small mammals that can hide in cracks in rocks could have co-existed with the dinosaurs.
Then what happened to all those ancient animals? Some died due to changes in climate, some died due to natural catastrophes, and some died due to human hunting. Also, some changes took place by evolution and adaptation; evolution proceeds most rapidly when populations are very large and conditions change drastically. In fact, under the right conditions, "evolution" (within limits) can take place very fast.
So where were the humans and modern animals in ancient times? They may have been living in higher altitudes where the climate was cooler and drier and the air pressure was less. Thus they would be less likely to have been covered and fossilized during the flood. In addition, the animals that existed in past ages may have been somewhat different than those we know today, due to the evolution and adaptation that has taken place since then.
Therefore the unusual plants and animals found in fossil layers, and the comparative lack of modern organisms in most fossil layers, is not a problem for creationism, not even for young earth creationism.