The overlay renders colorful boxes and error messages into your page to direct your attention to any errors that your page may contain:
The colors used in the overlay correspond to the report's levels and the text in the small black label contains either the affected component's name or (in the case of non-components) a selector for the affected element.
If there are a lot of errors on your web page or if your filter settings include more than just errors and warnings, the overlay may become very cluttered. Adjust your filters accordingly! Even when not cluttered, the overlay can get in the way of interactions with the pages actual UI. Remember that you can tone down or entirely switch off the overlay in the panel's options tab and the toolbar button's popup.
Good to know #
If Warhol's devtools panel is open (and only if the panel is open), you can click on any item in the overlay and the panel takes you to the related test result.