Hi
The area is light blue and directly above the main video track. It's initially unlabelled but contains "Drag and drop your video, text and image clips here to overlay"
Once you have done this it becomes labelled "Video Track 2" and the text moves up. Anything placed here will overlay (play over) anything on a lower track. Any sound track associated with the overlay clip will appear below Audio Track 1. You can numerous overlay tracks as Borate says. Note that sound tracks will mix unlike the video tracks.
Nat