Here is an example I am taking out of my own work in progress Natural-Selection map. The idea of an overlay is to create the illusion that only the lighted area on a texture is lit up and emitting light. The light emitted by the overlay is of course a 'texture light'.

First of all to create the overlay effect, we need a light texture, and an overlay texture. The overlay texture is just the area which will emit light, on a black background to create the illusion. For this tutorial I chose textures from the ns2.wad by Corey, these textures are light_panel02 and fx_lgt_panel02 for the overlay.

To start off with you get your light in place, with the exact geometry you want, and in the right position.

Secondly, you create the exact same geometry with a small difference. The brush must be 1 unit thick, placed exactly 1 unit infront of the current light fixture. The brush must also use the overlay texture.

The final steps of the overlay technique consist of creating the brush an entity, so clicking "to entity" will bring up a screen called properties. The settings for this are as follows:
func_illusionary
Render Mode : Additive
Render FX : 240-255 (NS Gamma may require a lower value to look correct)
Texlight Style : If a desired lighting effect is required, use it as a normal light or light_spot

Remember you need the texture light technique to create this, only make RAD values for the overlay texture, in this case it would only be fx_lgt_panel02. Thats simple overlay lighting, pretty simple, effective and widely used. This technique is versatile, and removing a RAD value will leave it as an overlay that is not emitting light, can sometimes be useful.