A planning layer that adds extra rules on top of the base zone: heritage, flood, bushfire or character preservation, for example. Overlays often add cost, time, or specialist consultants to a project.
Source: NSW Planning Portal
What it means for what you can build
An overlay sits on top of your base zone and adds its own rules, so two identical blocks can have very different development potential if one carries a heritage, flood or bushfire overlay.
Related terms
See this on your own property
Run any Australian address through Struqt to see whether overlay applies to your block, and what it means for what you can build.