There might be a misconception. Have a look at Ingalls' 1978 paper "The Smalltalk-76 programming system design and implementation" (https://dl.acm.org/doi/10.1145/512760.512762) which clearly shows overlapping windows. There is even an online version based on the original source: https://www.lively-web.org/users/bert/Smalltalk-76.html