Overlayfs/Unionfs/aufs
These are union filesystems, that allow multiple filesystems to be combined and presented to the user as a single tree. This allows the system designer to place parts of the operating system that are nominally read-only on different media to the normal read-write areas. OpenWrt is usually installed on raw flash chips without FTL. It uses overlayfs to combine a compressed read only SquashFS with JFFS2.
Read more about this topic: Flash File System