Screen overlays are things created by one app that cover part or all of screen while another app is in the foreground. Example is Twilight app to reduce blue light at night to help you prepare for sleep....it applies an overlay on top of everything else to tint the screen.. In addition to apps that tint the screen, apps that put buttons or indicators floating on top of everything else are using overlays.
You can imagine it may be dangerous for android to allow you to to change a sensitive setting while an overlay is active because you may be clicking on something different than what you think you are clicking on (if the overlaying app is malicious and trying to trick you). Therefore to improve security,
android doesn't allow you to change sensitive settings while an active overlay is detected.
So you need to identify the app applying the overlay:
* using app permissions settings described above for clues..
* also check recent apps and apps using memory and especially dev options/running programs for clues...
* it is narrowed down to apps with that overlay permission that are currently running a service.
Turn off the overlay FROM WITHIN THE APP THAT CREATED THE OVERLAY.
Once all overlays are disabled, you can adjust settings however you want. You can at that point also adjust permissions to deny overlay permission to the offending app if you are not satisfied with the controls within the app or the trustworthiness of the app.