GKE uses the kubenet network plugin for setting up container interfaces and configures routes in the VPC so that containers can reach eachother on different hosts.
Wikipedia defines an overlay as a computer network that is built on top of another network
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Should GKE's network model be considered an overlay network? It is built on top of another network in the sense that it relies on the connectivity between the nodes in the cluster to function properly, but the Pod IPs are natively routable within the VPC as the routes inform the network which node to go to to find a particular Pod.