AFAIK we have generally moved away from using the overlay for video playback, for a few reasons. The main ones are :
a) beginning with the R5xx family the video processing block was largely removed from the overlay pipe and the "render" portion of the video processing (scaling, colour space conversion, de-interlace, filtering etc..) was performed on the shader core instead
b) around the same time the use of compositors started to ramp up; video processed by the overlay pipe can't be picked up by the compositor so rendering video via the shader core (aka textured video) became the norm
I don't think the Linux Catalyst driver uses overlays for video these days either (I know the open source stack does not) but not 100% sure.
To further complicate things, overlay hardware is also sometimes used for a completely unrelated function - floating an OpenGL overlay (typically used for menus etc..) on top of normal application data. OpenGL overlay appears to be less common these days and eventually I expect it will get replaced with a shader-based compositing operation as well (if it hasn't already happened) but AFAIK the demand has not gone away completely yet.
Thanks for the instant confirmation.