Overlays can be hidden by the user too, not sure why that isn’t also mentioned there like it is with component.
I assume you’re talking abut some sort of button element, as a ‘panel’ is a different type of extension entirely lol. A large portion of overlay extensions start off using a small portion of the screen just to display a button that then opens a menu or activate stuff that makes use of more screen space.
The nice thing about overlay extensions too is that as you always have the full size of the player available to you, it’s easy to do things like fade out (or hide entirely) certain elements if the users cursor leaves the player, and fade back in when it enters, so as to not disturb the viewing experience of the actual stream. With components you can sometimes run into the issue where you want to hide elements, but then the user has to find where the extension is on the player because it can’t start fading elements in again unless the cursor is within the specific region of the extension, as it can’t tell if the mouse is hovering over the player when it’s outside of its own area.