It was merged into the Linux kernel mainline in 2014, in kernel version 3.18. It was improved in version 4.0, bringing improvements necessary for e.g. the overlay2 storage driver in Docker.
The main mechanics of OverlayFS relate to the merging of directory access when both filesystems present a directory for the same name. Otherwise, OverlayFS presents the object, if any, yielded by one or the other, with the "upper" filesystem taking precedence. Unlike some other overlay filesystems, the directory subtrees being merged by OverlayFS do not necessarily have to be from distinct filesystems.