An overlay network creates a logical topology used to virtually connect devices that are built over an arbitrary physical underlay topology. An overlay network is created on top of the underlay network through virtualization (virtual networks). The data plane traffic and control plane signaling are contained within each virtualized network, maintaining isolation among the networks and an independence from the underlay network.
SD-Access allows for the extension of Layer 2 and Layer 3 connectivity across the overlay through the services provided by through LISP.
Reference: https://www.cisco.com/c/en/us/td/docs/solutions/CVD/Campus/cisco-sda-design-guide.html