[jnovacho]

How exactly does this work? The example I chose is a mosaic of photos, over which is overlayed the original image with alpha set to 50%.

So it does not use the submitted photos as tiles, right?

[jakemanger]

If you adjust the overlay alpha to 0% you'll see it does use the submitted photos as tiles.

Click the "Create Mosaic" button and you should see it arrange the tiles live in the best possible way to reproduce the image. The overlay is a common technique people use to make the main image more visible. It's a personal preference thing.

Generally, the more diverse or colours you select for your tile images, the more clear and "good" the main mosaic image will be