You can also put the files anywhere on the SD card and navigate to that location when you are selecting your overlay in retroarch. The reason you can’t find that location is likely because you are not pressing ‘B’ enough times, you have to back out all the way to mmt/SDcard
Alternatively, you can put the overlays into a folder called overlays, zip the folder, and then change the file extension to .muxzip, and then place that file into the archive folder and install the archive via archive manager (apps) and it will appear alongside the muOS default overlays in the same directory.
More info here:Manually creating installable archives