Question...what is the difference between a texture and a overlay? You use them the same way, don't you? I've seen overlays that should of been categorized as textures, and vice versa. Am I looking at this all wrong? Will someone please clarify?
Many thanks! 
Good question, I wish I knew the answer. Hopefully soon someone will be able to clarify.
This is what drives me crazy, too! I want to organize my files, so I have a folder for overlays, one for textures, one for paper templates, and on & on. But once I'm in each of those folders, I have different folders indicating if they are grunge, patterned, etc., but some files I just don't know how to categorize! There are probably 1,000 files that I don't know where to place...so these never get used because when I need a overlay or texture or patterned paper, I can't go aimlessly searching through these uncategorized files.
Wish someone could make a list or something, providing a list of categories that could be used in overlays file, then textures file, patterns file, etc.
In my eyes a (paper) overlay is a ready-to-use layer to put over your colored layer.
Patterns can be used to make overlays, but also to fill elements or alpha's.
I think a texture is an overlay but an overlay doesn't have to be a texture. So I see an overlay as something you just lay on top of something else for some reason... might be pattern, texture, or anything else I can't think of right now. However texture is texture but it can come in the form of an overlay or anything really. I could really be wrong but that how my brain currently differentiates it now.
This is how I think of it. I put my stuff in an overlay folder, then break it apart to textures and patterns. Then from there I have categories under each like grunge under texture, and flowers under patterns. What further helps me is I think of an "overlay" (as in your definition) as something that I would recolour and a texture as something that I could use as is with blending options.
Me too... I look at textures and overlays like Heather and Cat both describe in here and sort them very similarly. Good to know I'm doing it right!
I've been doing what you've been doing, Cindy... think I need to change that after reading this thread.
Hi Lizanne! Hmmmm, how exactly would you change the way you have it all set up? Just not have an overlay folder and sort according to patterns (various types), textures (various types), etc.?
I think I'm more lost than I was before! If the paper has a texture to it, I file it in the textures folder, but when I try to break it down/organize it further, and I don't know what to call it, it just gets lost amidst the other "category-less" images!
I think I need a list of categories, and I'm just missing the knowledge of the different types of papers. Like, for instance, I didn't know until recently what a "bokeh" paper was. Now that I know, I can file those particular kinds of papers in the "Bokeh" folder. KWIM? or am I making no sense at all?!
My folders are: Overlays; Papers; Templates; Textures.
To me, an overlay is just that - a pattern etc., that I will be placing over something else.
A texture is something I will use in the background - for example, I may colorize a texture, then add an overlay pattern on top to create a paper.
My papers folder is reserved for finished products like those we can download from here.
The templates folder is strictly for .psd layered templates.
Thank you for clarifying @Sheila!
Here is my take on the subject! An overlay is already see through so the paper underneath still can be seen, an overlay can be patterned or a texture, but it has to go over another layer. If the texture is solid I would class it as a paper. To further confuse matters, any paper can be turned into an overlay by use of the opacity function.