Imagine you have two pieces of paper. One has a picture of a tree on it, and the other has a picture of a birdhouse. Now, you can take the picture of the tree and lay it over the picture of the birdhouse, right on top. It's kind of like you've put a transparent sheet of paper over the birdhouse picture, and you can still see it underneath, but the tree is now on top.
That's kind of what overlayfs does. It's like taking two different folders (or "directories," as they're called), and putting one on top of the other. The bottom folder is called the "lower" layer, and the top folder is called the "upper" layer. When you look at the files in the top folder, you can see the files in the lower folder too, but the files in the top folder take priority. So if there's a file with the same name in both folders, you'll see the one from the top folder.
This can be really useful, because you can have a "base" folder with a bunch of files in it, and then put another folder on top with just a few changes or additions. And you don't have to actually copy all of the files from the base folder into the top folder - they're still there in the lower layer. This can save space on your computer and make it easier to manage files.
So that's overlayfs - it's a way of layering one folder on top of another, kind of like putting a transparent sheet of paper over a picture.