It's not overlapping windows, but a similar concept. From folklore.org (awesome site, by the way; it made me a fan of that Apple):
Smalltalk didn't even have self-repairing windows - you had to click in them to get
them to repaint, and programs couldn't draw into partially obscured windows.
Bill Atkinson did not know this, so he invented regions as the basis of QuickDraw
and the Window Manager so that he could quickly draw in covered windows and
repaint portions of windows brought to the front.
Ah, I love folklore.org. I devoured every article on the site in about a week. Really makes you wonder what Apple would be like today if Burrell and Andy had had more power to override Jobs (see the "Diagnostic Port" story).