[X] When you check Overlays Allowed, the code generator takes special precautions when passing string and set constant parameters from one overlaid procedure or function to another.

Using Overlays Allowed on in a unit does not force you to overlay that unit, but Borland Pascal allows a unit to be overlaid only if it was compiled with Overlays Allowed on.

If you develop units that you plan to use in both overlaid and non-overlaid applications, compiling them with Overlays Allowed on ensures that you can do both with just one version of the unit.

Overlays Allowed is equivalent to {$O}.