Overlay networking is one of the perspective solutions to today’s Internet challenges. At basic service level, overlay networks can serve as a supplement and enhancement of existing services, such as routing and addressing. At high application level, overlay networks can be used for applications, which are difficult to deploy in existing IP architecture with some specific reasons, e.g., they need high-level information, which is hard to obtain by underlying layers. To address the heterogeneity of today’s Internet, overlay networks provide ways to service availability and desirable performance while retaining scalability. In contrast to changing the existing network layer, overlay networks allow bootstrapping, which is most important in the development of Internet infrastructure. Various applications of overlay networking are clarified in this paper. Research challenges including routing and searching in overlay networking are also identified. Overlay networking is one of the perspective solutions to today’s Internet challenges. At basic service level, overlay networks can serve as a supplement and enhancement of existing services, such as routing and addressing. At high application level, overlay networks can be used for applications, which are difficult to deploy in existing IP architecture with some specific reasons, eg, they need high-level information, which is hard to obtain by the underlying layers. To address the heterogeneity of today’s Internet, overlay networks provide ways to service availability and desirable performance While contrasting changing the existing network layer, overlay networks allow bootstrapping, which is most important in the development of Internet infrastructure. Various applications of overlay networking are clarified in this paper. Research challenges include routing and searching in overlay networking are also identified.