The application of overlay modeling to the description of the observed and predicted overlay errors allows for the multipurpose use of the successful modeling technique in identifying and resolving overlay problems. The presented paper describes the application of overlay modeling in estimating the exposure tool alignment system sensitivity to process/tool interaction and its potential impact on overlay performance. The described methodology is applicable to the characterization of various alignment systems and its use is described in detail. Another use of the overlay model allowed us to uncover large field mismatch and translational errors due to process induced change in wafer size. This discovery prompted the development of new exposure tool capabilities to provide adequate compensation for these overlay components. It is shown that analysis of unmodeled (residual) components of overlay also provided valuable insights into the peculiarities of exposure tool and process/overlay interaction.