The idea of the settings package is that you can test the new settings without building an image by just creating a new, temporary user account. But yes, in practice, overlay is quicker and doesn’t require occasional pushing packages straight to stable branch.
If they do, that is just a mismanaged package. In x86, the policy is to use the overlay for the files owned by other packages, and settings package for the rest. All files outside /home should be owned by some package.