What does the term 'overlayering' refer to in Dynamics 365 development?

Overlayering in Dynamics 365 development refers to the practice of directly modifying the base application code. This approach allows developers to add or change functionality within the standard application, typically by creating new code elements that supplement the existing ones. While this might provide a quick way to implement changes, it can lead to challenges during system upgrades, as modifications can conflict with future updates from Microsoft.

By altering the base code, developers risk losing their changes when applying patches or upgrades, or may encounter issues when merging their customizations with new standard features. As a result, it is generally advised to use extensibility features like extensions or customizations through configurations wherever possible, rather than overlayering, to ensure a more maintainable and upgrade-friendly solution.

The other response choices do not pertain to the concept of overlayering: creating additional tables in the database falls under database design and customization, using custom themes pertains to user interface design, and integrating third-party applications focuses on enhancing functionality rather than modifying base code.