PNG is the best file format for creating overlays and background effects. It is also the best for supporting transparent backgrounds. When to Use PNG For High-Quality Transparent Web Graphics – One advantage of PNG images is that they have maximum transparency to any degree. This ensures crisp and sharp graphics.

PNG images have a variable "alpha channel." Because this file format gives you more color depth, you can make images that are more vibrant.
Your illustrations only have a few colors. If your illustrations only have a few colors, you should choose PNG files.
PNG files are the best option if you need to save images in small files because they can be compressed to very small sizes.