Overlaying Images is an interesting concept. What you often mean is that you want a selected portion of Image 2 to replace the corresponding pixels of Image 1. Note that in some selected circumstances, you can be "creative" and make an overlay by selectively colorizing a greyscale image.
But let's say you want to do it the first way I mentioned above. If you were doing this with images on paper, you would carefully cut out Image 2 and paste it in place on Image 1. Well, the "paste" operation in the Image world means "replace the pixels", which is usually a several-step process. First, you form a "mask" that matches the Pixels you want to overlay from Image 2 onto Image 1. You use this Mask to zero out all the Pixels in Image 1 that are covered by the mask, effectively "erasing" the space you'll place Image 2. You then use the inverse of the mask on Image 2 so that it consists only of the pixels you want to add. Now add these two sub-images, effectively "pasting" Image 2 into a "hole" you created in Image 1.
Bob Schor
