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Different tools have different interpretations and implementations. As a long time Protel user (read (Altium), I recall keep-out wasn't a layer, it was a designation or property that could be placed on a polygon on any layer, the primary purpose of which was to prevent any copper within that area.

I guess, in this case, the OP has maybe imported an Eagle design into KiCad and it has preserved the layer name, but it may have lost its original function in KiCad. KiCad has gone a similar route (please pardon the pun) to Protel. You can place a "Rule Area" on any layer, within which you can define what objects are prohibited or accepted in that area. This is much more flexible than a restricted or keep-out layer.

Overlapping components are dealt with by a completely different means: by courtyards, which are layers associated with footprints, and which form inputs to the DRC (Democratic Republic of Congo - oops, I mean: Design Rule Checker).