Earlier quoted context omitted.
So it is a kind of "overlay" where the data buffer overlaps the piece of the code. I find the explanation of jhallenworld is correct.
In a sense, but ‘overlay’ generally means more than just re-using memory — it's reading in different sections of (usually) code in place of others; in modern terms, it's sort of like paging, but structured explicitly and (usually) manually at build/link time. PDP-11 Unix did eventually support overlays, but I don't think they were widely used. The ‘Unix way’ would be to have (as this C compiler does) separate program…
And this is "a poor man's" overlay of the data buffer over the piece of the code, specified explicitly and manually at the time of writing the program (the "bigger" overlay mechanisms I know of are also specified at the time of writing the program, not at the time of build or link). As the "scratch" area was overlaid, nothing has to be loaded, that's the only difference to the typical overlay where more often some code would also be overwritten over some other code. The other difference to the "classical," "bigger" overlay is that this was done exactly once over the life of the program.