An overlay is a type of filter that can be used in Photoshop to add extra information or graphics to an image. Overlays can be used to add text, logos, or other elements to an image. They can also be used as a way to change the color of an image. To use an overlay in Photoshop, first open the Image>Overlay menu and select the desired type of overlay. Then, choose the size and location of the overlay you want to create. Finally, click on the OK button to create the overlay.