It's a major maintenance pain, doesn't work on mobile (we had to make a killswitch for it to not open on mobile), relies on an old js library to handle url hash changes instead of the standard and cleaner pushState (not available for IE9 so core couldn't use it anyway, but contrib could). And as webchick very rightly points out: "once the Seven style guide is all done, there's a clear enough boundary between "front-end" and "back-end" that the extra chrome is no longer needed".
List of issues that can't be fixed properly because of overlay:
Other made really complicated because of it:
And that's just the open ones.