Overlays don't really fall into the Dungeon->Map->Square rules because, they do nothing. Instead they just float above the maps and allow for large overlays on the screen. They also allow small overlays such as monsters to appear on a single tile above the tile.
Example for Teresa:
info = "Teresa"
x = "7"
y = "8"
scalex = "1"
scaley = "1"
file = "tile/TeresaSprite.png"
Example for a large overlay (Pond):
info = "pond"
x = "1"
y = "6"
scalex = "4"
scaley = "4"
file = "tile/pondOverlay.jpg"
I want to point out that large overlays float above the map they don't look at the tiles underneath it so a person can walk on water if your not careful. Remember you can use the square commands to force the ground to be walls even on recursions but there may not be a path home.
x - the left right start top square is 0
y - the up down start top square is 0
scalex - how large the item is, left right, in TILES defaults to 1
scaley - how large the item is, up down, in TILES defaults to 1
file - where the overlay is
info - stuff to identify the overlay not brought in
Overlays should be used cautiously but allow for some large items to be added with out spending a week trying to do it all with tiles. A fun little extra though...