When attaching XREFs to your drawings, the choice to insert them as an “Overlay” or as an “Attachment” may not be so clear and might be confusing.
Overlay – only the XREF that is selected is referenced in the current drawing.
Attachment – The Selected XREF is referenced and any XREFs that are associated with that drawing are also brought in to the current drawing.
XREFs that are brought in as “Attached” might bring unwanted objects or even create a circular reference. To avoid this, it is recommended to bring XREFs into your drawings as an “Overlay.” This is great except that AutoCAD’s default is set to bring them in as “Attached.”
To change this:
Change the system variable XREFTYPE to <1>