The overlay image is used to communicate information with a user about the state of an application. The C1TaskbarButtons overly icon can be set at design time in the Properties window or can be set via code for run time interaction. It is more common to see this property set when a specific event occurs at run time.
The OverlayIcon property takes type System.Drawing.Icon and requires the size of the icon to be no more than 16x16 pixels.
For task-based help about overlays, see Adding an Overlay Image to the Taskbar Button.