Overlay is a GIS operation that superimposes multiple maps with a common coordinate system together or the process of determining what is on top of what. A base map is used as the origin of all other Map Layers . An overlay creates a composite map by combining different data sets. Data sets are displayed on map layers using Vector or Raster Data Models. source: Westfield State UniversityBefore the use of computers, it was necessary to print or draw maps of the same area at the same scale on clear plastic and actually overlay them to see what was on top of what. The overlay process may now be done through the use of several GIS tools on the computer including: intersect, identify, and union depending on the user’s needs. Feature overlays from vector data are created when one vector layer (points, lines, or polygons) is merged with one or more other vector layers covering the same area with points, lines, and/or polygons. A resultant new layer is created that combines the geometry and the attributes of the input layers. This is done in order to illustrate the spatial relationship between the two layers of separate data. An example of overlay with vector data would be taking a layer that displays the watershed (vector data in the form of lines) for a certain region and laying over it a layer that shows the political boundaries such as county lines (vector data in the form of polygons) of that same region. This would be an example of line-polygon overlay. Two other vector overlay types are point-in-polygon and polygon-on-polygon. •Intersection, where the result includes all those polygon parts that occur in both A and B and all other parts are excluded •Union, where the result includes all those polygon parts that occur in either A or B, so is the sum of all the parts of both A and B. Different from identify in that individual layers are no longer identifiable. •Symmetric Difference, where the result includes only those polygon parts that occur in A but not in B (sometimes described as a Difference operation), and •Exclusive or (XOR), which includes polygons that occur in A or B but not both, so is the same as (A Union B) minus (A Intersection B) •Identity where input and target or identity layer are overlayed and output is a combination of the two layers that include attributes from both layers. It is important to note that these functions can change the original polygons and lines into new polygons and lines and their attributes . Raster overlay involves two or more different sets of data that derive from a common grid. The separate sets of data are usually given numerical values. These values then are mathematically merged together to create a new set of values for a single output layer . Raster overlay is often used to create risk surfaces, sustainability assessments, value assessments, and other procedures. An example of raster overlay would be to divide the habitat of an endangered species into a grid, and then getting data for multiple factors that have an effect on the habitat and then creating a risk surface to illustrate what sections of the habitat need protecting most. Source.