The overlay
Each change made to an icon is not made permanent until the next change. By clicking on
a square in the grid window it's color will change but this change can be reversed by
clicking on the undo button (or selecting undo from the menus). The same is true if instead
of clicking on a square you create say, a line of text or a filled circle. Undo will reverse these
additions. That is because what you see is the new addition "overlayed" on top of what was
there before.
Not only can a new overlay be undone it can also be shifted around by using the arrow buttons at
the left of the toolbar 
as well as rotated by using the buttons
next to the arrows. In this
way new additions can be positioned to the exact place where they are needed.
The entire image can be moved with the arrow buttons by first pressing the
whole image button.
(this is best done by turning off any transparency first).
The overlay clone
The "Edit" menu contains an option to create an "overlay clone". This copies the
overlay to the underlying image but the overlay remains intact so that the arrow buttons
can be used to continue to move the overlay around. This can be useful for creating
multiple copies of the same object in the image.