Stupid? Nope. ALL of my friends are wowed by this the most.
It really showswhat this little sucker can do with its cpu/gpu.

eg. My friend was testing out my phone.

He started up SiB and started a normal xvid video file. (Music video)
Then press F to show top bar, then task switcher.
Thumbnail of the video still clearly shows that video is playing.
(Also, we can hear the music from the music video..)
While this, my friend launched Megagear Sega emulator.
Then he started playing a game. It was playable! Amazing.
(btw, the music video was still playing in the background)
Then he quit the emulator, task switcher still showing video thumbnail moving.
Then click on the video again. Voila, back to the video. Awesome.
(there were no hiccups. Video was still playing smooth.)

I'm not sure what other phone can do this. Impressive.

Oh, and I do not see any Overlay issue other than in Conky app.
Web browsing and various other apps all work fine while video is playing in background.