Overlay usually blends the two images together, almost like taking two projector slides and putting them right on top of one another. Are your two skies similar in color?
Thank you for your reply. The original sky is a washed out white whereas the replacement sky is blue. I guess I assumed the blue would override the white but it just gets hidden behind it.
The bluesky would not show with overlay if the sky beneath it is white. If you just want to blend the blue sky in, why don't you try toggling the opacity of the blue sky and use the "Fade" effect like Russell suggested in the tutorial and see if the result works for you?