Hey good question man!
Yes, you can overlap an automation clip, if you’d like.
Personally, I like to have each item on it’s own line (track) within the Playlist. I find that gives me the easiest visual while working in the arrangement and audio painting stages.
Here’s a video I created for you:
To further clarify..
If you do overlap an audio clip, automation clip, or pattern clip on the same track within the FL Studio Playlist, there is an option in the top left of the Playlist to switch between audio / automation / pattern..
The FL Studio manual on the Playlist calls this the Clip Focus:
Personally, I think switching between this Clip Focus is an extra step, but there’s NOTHING WRONG with overlapping the automation clip over a pattern!
Further, I do like to try and keep automation clips very close to the pattern/audio its pertaining to, for easy editing. (Typically just one track underneath the pattern, for example)..
Hope the video helped..
You can learn more in my Automation Clips Course in FL Studio.