Overlay vs underlay in summary

An Underlay network is the physical network responsible for the delivery of packets like DWDM, L2, L3, MPLS, or internet, etc. while an overlay is a logical network that uses network virtualization to built connectivity on top of physical infrastructure using tunneling encapsulations such as VXLAN, GRE, IPSec.

https://telcocloudbridge.com/blog/overlay-vs-underlay-networks/