Exactly what do you wish to apply as an "overlay," a Title (Text, or graphics, in perhaps a Lower-Third)?
What version of PrE and OS version, are you using?
For Transitions, you can first set the desired Default Transition, say Cross-Dissolve, then drag your Clips to the Timeline, Select them all, and choose Apply Default Transition.
Good luck, and please let us know a bit more.
Sorry! Indeed I wasn't very clear.
What I meant was, that for the default "Cross-Dissolve" transition to work correctly, the clips need to be overlayed on each other at least for the duration of the transition. Otherwise, one video stops while it's even visible, and audio cuts abruptly.
If I just add all clips to timeline, they are put next to each other, without any overlap. I can overlap tham easily with ctrl+drag, but thats tedious if I have a lot of small clips..
Ah, you are attempting to do A-B Roll editing, with Clips above other Clips.
In general usage, that is not necessary with an NLE (Non Linear Editor), such as PrE.
However, when adding Transitions, one DOES need Handles on the Clips. This article will explain Handles well, and the "fix" is likely in it: http://forums.adobe.com/message/3727485#3727485
It shows things in terms of A-B Roll editing, just to show the concept.
With adequate Handles, then one can butt the Clips up on the same Video Track, select them all, and then use Apply Default Transition (remember, that is usually the Cross-Dissolve, but can be set by the user).
I've read the links, however, they still don't answer how to add multiple clips with Handles that are long enough for the transition...
To establish Handles on a Clip, you would set the In Point and Out Point for that Clip to give you the number of Frames, required for those Transitions.
That is why one should shoot a second, or two, of Video, before the desired "action," then keep the camera rolling for a second, or two, after that action has ceased. Those provide the Handles. This is done in the shooting.
In a commercial shooting situation, it would go something like this:
Director - "Roll camera."
Camera Operator - "Speed," indicating that the camera is up to speed (not heard so often with video, but was common with film.
Director - "Slate," telling the assistant to clap, or trigger the slate.
Assistant - "Scene ___, take ___ " then clap, or trigger the slate in the beginning of the scene.
Director - "Action."
Actors deliver their lines, or act out the scene.
When complete, the Director would allow for the camera to roll for perhaps a second, or two, then:
Director - "Cut."
When edited, the beginning is cut out, by setting the In Point for that Clip, to just after the Director called "Action." The Out Point would be set, just after the action ends. This produces Handles on each end of that Clip.
If the Clip ONLY contains just the desired action, there will not be adequate Handles. The only viable, and artistic way to join Clips, without Handles is a Butt-Cut.
In most situations, I use a Butt-Cut anyway, unless:
I want to show that time has passed between the Tail of the first Clip, and the Head of the second Clip, or a change in location, or action, and then I will use a Cross-Dissolve. If much time has lapsed between the two Clips, or the location has changed greatly, I will use a Dip-to-Black, and if I want the audience to know that a lot of time, or a major change in location has taken place, I will extend the "black," between the Dip-to-Black, by adding a second, or two, of Black Video. The audience will be shown that something major, like a lot of time transpiring, or a major change in location, has taken place.
If I plan on using other Transitions, I first need a good reason for doing so, and then will plan my shots (Clips) to allow for those. In general, I will first Butt-Cut, then Cross-Dissolve and finally, Dip-to-Black, but I use those to introduce changes to my audience.
Good luck, and hope that you have adequate Frames at the Head, and the Tail, to set the In & Out Points, to provide the Handles.