One of the cool features in the October 2021 Lightroom Classic update is the way that Adobe has completely overhauled how overlays work in the Masks panel.
The slightly clunky red overlay with its color alternatives has gone. In its place is a much better overlays tool which helps you see the masks you’ve created.
The Masks panel now has three options for viewing overlays: a Show Overlay box (1), color swatch (2) and overlay menu (3).

There are several ways to see the overlay that belongs to a mask.
1. Check the Overlays box in the Masks panel and click on a mask.
2. Click on a mask in the Masks panel and use the ‘O’ keyboard shortcut to toggle the mask on and off.
3. Hover over a mask icon in the Masks panel. Lightroom shows the mask even if the Overlays box is unchecked.
Changing the overlay color
You can change the color of the overlay to make it easier to see by clicking the overlay color swatch in the Masks panel. This brings up the Overlay window.

Click on the color picker or one of the color swatches underneath it to change the overlay color.
Use the Opacity slider to adjust the Opacity of the overlay.
Select whether the mask shows the Affected Area (default) or Unaffected Area.
Overlay Mode
At the top of the Overlay window you’ll see the Overlay Mode menu, which gives you access to six overlay modes (you can also access the Overlay Mode menu from the Toolbar).
Color Overlay: Shows a color overlay (the default setting). You can change the color of the overlay by clicking the color swatch icon and using the tools in the Overlay window.
Color Overlay on B&W: Shows a color overlay on top of a black and white version of the photo. This makes it easier to see the mask.

Image on B&W: The masked area is shown in color, the unmasked area is shown in black and white. This only works with color photos.
Image on black: The unmasked area is shown in black.

Image on white: The unmasked area is shown in white.
White on black: The mask is visible, but the photo is hidden. Masked areas are white, and unmasked areas are black.

The Overlay menu
The above options are also available in the Overlay menu accessed by clicking the overlay menu icon (the one with the three dots).

This menu has some extra options.
Automatically Toggle Overlay: When this option is checked and you click on a mask, the overlay is only displayed only when you move the cursor over the mask icon. If unchecked, the mask is always displayed when you click on the mask icon.
Show Pins and Tools: This option has four choices (also available in the Toolbar).

Auto: Lightroom shows the Mask Pins, but automatically hides them when you move the cursor over the tool bar, left- or right-hand panels, Filmstrip, Module Picker or menu.
Always: Lightroom always shows Mask Pins.
Selected: Lightroom only shows Mask Pins belonging to the selected mask in the Masks panel.
Never: Lightroom never shows Mask Pins.
Show Unselected Mask Pins: Check this option to see all Mask Pins on the photo when no Masks are selected. The unselected Mask Pins are not displayed when a Mask is selected.
Color Overlay Settings: Activates the color picker, just like clicking the overlay color swatch.
Masking in Lightroom Classic
You can learn more about the new masking and local adjustment tools in Lightroom Classic in these articles:
New Local Adjustment Tools in Lightroom Classic
How To Use The Lightroom Classic Masks Panel
The Masks panel is covered in full detail in my ebook Mastering Lightroom Classic: Book Two – The Develop Module, which you can buy today for just $12.