Overlays are very common in real vintage video games. They add colorful and complex static images generated physically to simple and monochrome graphics generated electronically. The combined results look very vintage. Examples include:
1. Magnavox Odyssey;
3. Atari Steeplechase, as well as its Soviet clone Skachki;
4. Sega/Gremlins Frogs;
5. Many others.
But, for some strange reasons, they are completely forgotten by designers of modern vintage game recreations, including Hackvision. Why not start designing them? They can be made both for existing and newly developed games.