My understanding is that Overlay is a hardware device - it's where the graphics card renders its frame buffer and then renders a seperate area (the overlay).
Using 3D to emulate overlay is a perfectly valid way of doing it, but it's not actually overlay - which is Hans' point.
Overlay is obsolete.
Using 3D to gain the same benefits as overlay is not.
Hans isn't saying that the drivers don't need video support, he's saying it should be done via 3D, not overlay. Which is correct, as overlay is indeed pretty much obsolete these days of 3D graphics cards.