Test that layers can be nicely added or removed from a squashed layer, without unnecessary repaints on any layer. Click anywhere to test interactively; keep clicking to proceed through the test.

CASE 1, original layer tree with overlap1 and overlap2:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='A' class='overlap1'",
      "position": [140, 140],
      "bounds": [120, 120],
      "backgroundColor": "#00FF00"
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}

CASE 2, overlap3 gets added:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='A' class='overlap1'",
      "position": [140, 140],
      "bounds": [140, 140],
      "backgroundColor": "#FF00FF",
      "invalidations": [
        [40, 40, 100, 100]
      ]
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}

CASE 3, overlap2 gets removed. Since this does not resize the layer, there should only be a repaint of overlap2:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='A' class='overlap1'",
      "position": [140, 140],
      "bounds": [140, 140],
      "backgroundColor": "#FF00FF",
      "invalidations": [
        [20, 20, 100, 100]
      ]
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}

CASE 4, overlap1 gets removed:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='C' class='overlap3'",
      "position": [180, 180],
      "bounds": [100, 100],
      "contentsOpaque": true,
      "backgroundColor": "#FF00FF"
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}

CASE 5, overlap2 gets added back:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='B' class='overlap2'",
      "position": [160, 160],
      "bounds": [120, 120],
      "backgroundColor": "#FF00FF",
      "invalidations": [
        [0, 0, 120, 120]
      ]
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}

CASE 6, overlap1 gets added back, and overlap3 gets removed:
{
  "layers": [
    {
      "name": "Scrolling background of LayoutView #document",
      "bounds": [800, 600],
      "contentsOpaque": true,
      "backgroundColor": "#FFFFFF"
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV class='composited'",
      "bounds": [400, 400],
      "contentsOpaque": true,
      "backgroundColor": "#808080",
      "transform": 1
    },
    {
      "name": "LayoutNGBlockFlow (positioned) DIV id='A' class='overlap1'",
      "position": [140, 140],
      "bounds": [120, 120],
      "backgroundColor": "#00FF00",
      "invalidations": [
        [0, 0, 120, 120]
      ]
    }
  ],
  "transforms": [
    {
      "id": 1,
      "transform": [
        [1, 0, 0, 0],
        [0, 1, 0, 0],
        [0, 0, 1, 0],
        [60, 60, 0, 1]
      ]
    }
  ]
}