Selecting an image would in some projects be quicker if you actually could see the image in the context. If you’re making a magazine, a brochure or a web banner, the design could be pretty much set, and you just need the image to go with it.
So, what Overlay does is to show your graphics with transparency. If you have an eps, pdf, or a png you could open it in Overlay and place it for example over your stock image provider, and then quickly browse through images.
Here I got my Pet World Grand Opening banner, for which I need a great pet shot.
You could also use this for say a photography shoot for an ad, when the design already is set. To instantly get to view the images in context could help you to spot mistakes or make small adjustments.
This is a rough alpha version, take it for what it is. One could easily imagine a few useful features like resizing, outlining the surface, inverting the colors and tabs with different artwork.