Fullscreen and Picture in Picture for Web Video in Overlay
Until now, clicking the fullscreen button on a video inside Overlay did nothing at all. That's fixed in Overlay 2.0, along with picture in picture in the version you download from our website.
Fullscreen
Click a video's fullscreen button, the fullscreen control on a plain HTML5 player, or double-click the video on sites that use that gesture, and the video fills the screen the way it does in Safari. It opens on the display where the panel is. If you use more than one display, that's worth knowing, because the first version sent it to whichever display your other app was on.
While the video is fullscreen, the panel gets out of the way. If it's docked to a screen edge, it tucks into that edge. When you leave fullscreen with Esc or the site's own button, the panel comes back where it was and the page keeps the keyboard, so pressing space pauses the video straight away.
You can also leave fullscreen by reaching for Overlay the way you normally do. Your global shortcut, the menu bar icon, clicking one of Overlay's notifications, or pushing the pointer against the edge the panel is docked to all do the same thing: the video leaves fullscreen and the panel comes back. Showing the panel on top of a fullscreen video wouldn't be useful, since the page isn't in the panel at that moment.
I've tried this on Bilibili, Xiaohongshu and a plain HTML5 test page. I haven't gone through YouTube yet.
Picture in picture
In the version from our website, the picture-in-picture button works, both the one some sites put in their player and the one in the standard video controls. The small window is the regular macOS one: drag it to any corner, resize it, and it stays there when you hide Overlay. Closing the tab closes it.
The App Store version doesn't have picture in picture. It depends on a part of WebKit that apps on the App Store aren't allowed to use. A site might still show its picture-in-picture button there, and it won't do anything.
If a site doesn't offer a picture-in-picture button at all, Overlay doesn't add one yet.
Things that are still rough
The menu bar often stays visible at the top of a fullscreen video, and it shows the menus of the last app you used rather than Overlay's. It comes down to how macOS treats apps without a Dock icon, which Overlay is. I'm looking at ways around it but don't have a fix yet.
On one site, a short clip turned the whole screen white when it finished playing in fullscreen. Esc brings you back normally. A plain WebKit view does the same thing, so it isn't something Overlay does, but you may run into it.
When this isn't the tool
If you mostly want to watch video, Safari or a dedicated player will serve you better. Overlay is a floating panel for keeping a few web pages next to your work, above fullscreen apps and across desktops. Fullscreen video is there so that a video in one of those pages does what you expect when you click the button, not to make Overlay a place to watch things.