The script explains how to customize overlay files in Breeze software based on the time of day (AM/PM). By using the %P token, which returns 'AM' or 'PM', users can set up two overlay files named 'Overlay am' and 'Overlay pm' for morning and afternoon respectively. It demonstrates how to configure the background overlay file name suffix in the advanced settings to automatically switch between the two overlays depending on whether it's the morning or afternoon.