Instagram Overlays are a type of filter that can be used to enhance photos and videos on the popular social media platform. They are created by combining two or more images, often with a transparent effect, to create a unique look. The term 'OVERLAY' is derived from the process of layering images on top of each other. Instagram Overlays can be used to add text, graphics, and other elements to photos and videos, allowing users to customize their content and create unique visuals.