Makes sense. I added mkdirhier of OVERLAYFS_ETC_MOUNT_POINT for the case of OVERLAYFS_ETC_CREATE_MOUNT_DIRS == 0. Let me know if there is a better solution for read-only filesystems. The trouble with testing is that I could not find any existing feature in yocto-kernel-cache that enables either CONFIG_SQUASHFS or CONFIG_EROFS_FS. Is there another way to enable kernel features for the test? Thanks, baruch