Image overlay in PowerPoint is the technique of placing an image (somewhat transparent image), on top of another image to create a new overlaid image.
Image overlay is very commonly used to create attractive flyers, banners, magazine covers and so on. The use of image overlay is endless.
How to create transparent image using PowerPoint : READ THIS LESSON
How to make picture fit slide in PowerPoint : READ THIS LESSON
If you know how to create transparent image in PowerPoint, creating image overlay is simple. Place the first image and then place the image made transparent on top of it.
In below picture, I have covered the sky with a rectangle shape.
Next, Right-click Rectangle, select Format Shape from context menu. We will delete the two middle Gradient stops by selecting it and press the delete key on keyboard.
Finally choose the desired color of the Gradients and adjust the transparency to achieve result as shown below.
It is perfect example of using overlay method on images in PowerPoint.