An AutoCAD overlay is a type of reference. Unlike an AutoCAD attached reference, if it becomes a nested reference, it is not displayed, nor are any of the files attached to it. Thus, an overlay might be used when designers working on a portion of the project need to see information that will not necessarily be displayed at the parent file level. To create a MicroStation reference attachment that behaves like an AutoCAD overlay, turn on the Ignore Attachment When Live Nesting setting in the Attachment Properties dialog.

When you save a DGN file to a DWG file, you can save reference attachments to DWG files as overlays. To do this, open the Save As DWG/DXF Options dialog, and turn on Create Overlays for Reference Attachments (No Live Nesting). When this setting is on, all references are created as overlays, whether or not the Ignore Attachment When Live Nesting setting is on. This setting effectively disables live nesting in the DWG output file. It is useful for files where live nesting is turned off for all attachments.