What is difference between an XREF attachment and overlay?
Sorry I could not be more help
but if you go to that web site it will have what you are looking for.
An attached XREF is attached to the file and will follow it into future XREF's.
The overlay is like a transperancy and does not follow if the new file is used as an XREF.
If DWG "A" is XREF'd into DWG "B" as an attachment, when you XREF DWG "B" into another file it will bring the XREF of DWG "A" with it. This can create circular references if you were to XREF "B" back into "A".
If this is a potential issue, use the overlay function and the XREF will not follow the new file. I have had this issue with multiple departments using XREF's within the same project, you wind up with multiple copies of the XREF in the same file.
It's a bit confusing but I always use overlay to prevent possible problems.