What is the purpose of Overdub Fadeout found under the new performance flyover screen?
As you record over an existing loop, the default behavior is that the original loop gradually fades away. This gives priority to new material.
The default setting of Overdub Fadeout is 98%. This means that while you are recording to a loop, every pass around the loop the old material will be faded out to be 98% as loud as the new material. It would take many, many passes to completely fade out the old material as it only loses 2% of its volume on each pass. If Overdub Fadeout is set to 100%, you will find that the volume of the loop quickly gets out of hand. That's because the old material never fades away, and instead the new material added on each pass combines to create an ever-expanding rolling ball of noise!
If Overdub Fade out is set to something like 25%, the background audio will be severely quieted on every pass. At 0%, the old material will play for only one pass and then will be gone. This can be quite useful as a special effect in some situations.