Not all the texture is used, it's dependant on what item it's pulling from (chestplate, leggings) sometimes separating by item helps with layering.

leggings and boots use layer2.

chest, legs and helmet use layer1.

leggings can use the chest part on overlay, but it's not dyable and no arms, so keep that in mind. (chest section on legs should be on upper half of overlay i believe)

overlay is a copy of original layer, can transparant on both

Non overlay layers are dyable so keep them shaded in gray tones.

Overlay will render on top and keep the colours you paint.

same for the item, overlay renders on top, neutral gray's for dyable part.

