ID:1873268
 
(See the best response by Ter13.)
Question, is it possible to have lets say an eye overlay not appear over long hair but under it? like having the hair overlay have priority over the eye overlay?

Yes. Look at the layer variable.
Best response
http://www.byond.com/forum/?post=1613721

You'll want to use FLOAT_LAYER. It's also helpful sometimes to split up overlays into two icons and create an overlay and an underlay variant to help with layering things a bit.

You can use any negative value with FLOAT_LAYER, so you can have minor variations in between FLOAT objects, which will give you precise control over the layering of overlays and underlays.