Here's a quick example of the visibility/symbology issues that can come up with overlapping polygons:
1. 3 polygons were digitized. This is what is visible when it is just simple fill. Note only 2 of the 3 polygons are visible. A viewer would not even realize that there is another polygon here.
2. Breaking out the polygons by a year using fill symbology looks better, but still can only see two of the three polygons. Note also that the "missing" polygon is the one that was drawn first and the 2015 polygon (blue) was drawn last, thus the 2015 is on top of the green polygon.
3. Symbolization with a hollow fill. 3 polygons visible, but the linework can can potentially confuse a viewer as to the extent of each poly unless you color code the linework or use other cartographic methods. I labelled the year here, but as you can see that is not the best way to go to help the viewer figure out which extent is which. Definitely potential for confusion.
Usually folks avoid using overlapping polygons, as they can cause issues like this. Also, as Darren Wiens mentioned the overlapping can cause major headaches when one does geoprocessing on the layer if the user is not aware that they polys are overlapping and does not adjust for that.
Now, that said, I have seen some folks who do use overlapping polygons. The two topics that come to mind are Fire and Plant/Animal specie datasets. For example, I've seen Fire datasets of polygons for many years of burned-area in one poly layer for Fire. For Plants, sources like the California Natural Diversity Database (CNDDB), which have years and years of polys for Sensitive Species overlapping each other California Natural Diversity Database Home .
So ultimately it comes down to what you want to do with it, realizing that going forward with overlapping polygons has several potential issues, which will require some consideration and maybe some tradeoffs.
Chris Donohue, GISP