The video acceleration was done the same way with overlays because of the same hardware limitations. I remember the difference was that they used chroma keying to try and fake that it knew how to work with the windowing system -- the hardware would mask the video using the chroma key color while rendering the plane. Of course if you had another window that happened to have the chroma key color for text or something, you could drag it over the video and the text would appear oddly transparent. This happened with certain drivers on Windows up to XP, and on Unix/X11 when using the old "XVideo" extension.

But this is indeed tangential and not relevant to the original comment, because the chroma key color could be anything. On one particular driver I had, I remember the chroma key color was a very ugly shade of brown :)