Overlay windows can express interest in events just like a standard X window. An overlay window receives any event that occurs within its visible shape; the paint type of the pixel at which the event occurs doesn't matter. For example, if the window expresses interest in window enter events, when the pointer enters the window's visible shape, the window receives a window enter event, regardless of whether the pixel is opaque or transparent.
This has some implications for how applications should implement interactive picking (selection) of graphical objects. Applications that draw graphical figures into an overlay window above other graphical figures drawn into the underlay window should express interest in events in either the overlay or underlay window, but not both. When the application receives an input event, it must use its knowledge of the overlay/underlay layering to determine which graphical figure has been picked.
For example, let's say the application expresses interest in events on the underlay window. When the application receives an event at coordinate (x, y), it should first determine if there is a graphical figure at that coordinate in the overlay. If so, the search is over. If not, the application should next see if there is a graphical figure at that coordinate in the underlay.