You have to remove the element from the parent. Something like this:
d = document.getElementById('overlay');
d.parentNode.removeChild(d);
Or you could just hide it:
d.style.display = 'none';
And, oh: you can add Javascript code to a (newly created) element by assigning a function to the onclick attribute.
d = document.createElement('div');
d.onclick = function(e) { this.parentNode.removeChild(this) };
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