Overlays work similar to drop-down terminals like Guake, but are integrated into the WM and work with any application. To create an overlay, press Super+Ctrl+W or drag a window to the top right corner. You can now toggle the overlay on or off by pressing Super+W or hovering over the corner.
The overlay is locked by default which means it can't be closed by accident until it is unlocked. Right clicking on it in the title bar resets its dimensions. Right click dragging on it in the title bar lets you change the size. Positional or horizontal changes will not be permanent until the overlay is unlocked by right clicking on the close button.
Declaring a new overlay will replace the old one. The old overlay will return to being a normal window.
Alternative way to create an overlay: Super+Click on the layout indicator.