What --help fails to mention is that in this script --efi specifies a GUID partition table with a fat filesystem.  This script currently only formats a single partition on the target device, and /EFI/BOOT/ must be on a fat filesystem.

If UEFI booting is required on a system, and you want an overlay larger than the fat limit of 4095 MiB, the USB stick could be manually partitioned with a small EFI System Partition for /EFI/BOOT/ components and a second ext4 formatted partition for the other LiveOS components (/images, /LiveOS, /syslinux, ...).  The grub.cfg would need to reference the UUID's of the second partition and the overlay directory/file name would need to bear the second partition's name and UUID.

If legacy MBR booting is available, the following script should work to give you a USB stick with an OverlayFS overlay the size of the ext4 formatted disk.

 livecd-iso-to-disk --format --reset-mbr --overlayfs ./Fedora-KDE-Live-x86_64-29-1.2.iso /dev/sdb

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I believe that this is very valid issue that would make this tool a magical wand on modern systems. EFI is a must have, while VFAT is a must get rid of. Using the --efi option with overlay or home systems above 4g should be a standard. Either >4g or efi is very silly restriction.

In the ideal world it would default to creating efi with separate partitions for data and boot, as necessary.

I'm working on this now and will soon submit a pull request to https://github.com/livecd-tools/livecd-tools for testing & evaluation. The MacIntel boot path is probably broken and could use the help of some experienced developers.

This bug appears to have been reported against 'rawhide' during the Fedora 33 development cycle.
Changing version to 33.

(In reply to Frederick Grose from comment #5)
> I'm working on this now and will soon submit a pull request to
> https://github.com/livecd-tools/livecd-tools for testing & evaluation. The
> MacIntel boot path is probably broken and could use the help of some
> experienced developers.

how'd that go? hope you get it merged because definitely there's an audience for it
this bug is still valid as of Fedora 34

See https://github.com/livecd-tools/livecd-tools/pull/176  Testing, comments would be appreciated.