Overlay combines two or more layers into one single layer. You can think of overlay as peering through a stack of maps and creating a single map containing all the information found in the stack. In fact, before the advent of GIS, cartographers would literally copy maps onto clear acetate sheets, overlay these sheets on a light table, and hand draw a new map from the overlaid data. Overlay is much more than a merging of line work; all the attributes of the features taking part in the overlay are carried through to the final product. Overlay is used to answer one of the most basic questions of geography, "what is on top of what?" For example:
The layer to be overlaid with the analysis layer.
The overlay method defines how the analysis layer and the overlay layer are combined.
This is the name of the layer that will be created in your contents and added to your map. It will have the same feature type (areas, lines, or points) as the overlay layer. The default name is based on the analysis type and the input layer name. If the layer already exists you will be asked to confirm if you want to overwrite it.