First of all, what is overlay icon?
Overlay icons are small icons drawn over an existing icon, typically at the bottom left corner. It is used widely by Windows to notify the user that some item has a special function or attribute. Shortcuts are one of those that you probably know of.
There are 5 types of overlay icons that come with Windows 7.
1. A small arrow
This is obviously owned by shortcuts. Same as before.
2. A padlock
This indicates that you have a private item in a non-private directory, in which private item means an item where the only user account with access is you. This is new in Windows 7.
3. A downward-pointing blue arrow
It tells that this is a “to be written to CD” item. Same as before.
4. A pair of green swirly arrows
The item is available offline. It used to be a pair of blue and show on everything that are offline in XP. But in Windows 7, the swirly arrows are shown only on the root of the folder that is offline.
5. A gray X
This means that the item has been archived. It used to be a black lock in XP.
Note that you don’t see that sharing hand any more in Windows 7, given the changes in how people use computers, sharing information is becoming more and more of the default state. Besides, when you set up a HomeGroup, pretty much everything is going to be shared.
Generally speaking, overlay isn’t a good way of presenting information. But since it’s been around for a very long time in windows systems and people seem to be already used to it, it won’t be replaced by any other replacements any time soon.
[via The Old New Thing]