diff --git a/Assets/settings-default.json b/Assets/settings-default.json
index b2c89673..ae50cf07 100644
--- a/Assets/settings-default.json
+++ b/Assets/settings-default.json
@@ -81,8 +81,7 @@
     "fontDefaultScale": 1,
     "fontFixedScale": 1,
     "tooltipsEnabled": true,
-    "panelsAttachedToBar": true,
-    "panelsOverlayLayer": false
+    "panelsAttachedToBar": true
   },
   "location": {
     "name": "Tokyo",
diff --git a/Commons/Settings.qml b/Commons/Settings.qml
index 50bc41c4..579cbefd 100644
--- a/Commons/Settings.qml
+++ b/Commons/Settings.qml
@@ -214,7 +214,6 @@ Singleton {
       property real fontFixedScale: 1.0
       property bool tooltipsEnabled: true
       property bool panelsAttachedToBar: true
-      property bool panelsOverlayLayer: false
     }
 
     // location
@@ -531,18 +530,6 @@ Singleton {
       return
     }
 
-    // TEMP - disable Open panels on overlay which used to be true by default.
-    if (adapter.settingsVersion < 18) {
-      try {
-        if (adapter.ui.panelsOverlayLayer) {
-          adapter.ui.panelsOverlayLayer = false
-          Logger.i("Settings", "Upgraded panelsOverlayLayer to false by default")
-        }
-      } catch (e) {
-
-      }
-    }
-
     const sections = ["left", "center", "right"]
 
     // -----------------
diff --git a/Modules/MainScreen/MainScreen.qml b/Modules/MainScreen/MainScreen.qml
index e798ebe7..319da47b 100644
--- a/Modules/MainScreen/MainScreen.qml
+++ b/Modules/MainScreen/MainScreen.qml
@@ -65,7 +65,7 @@ PanelWindow {
   // This ensures all keyboard shortcuts work reliably (Escape, etc.)
   // The centralized shortcuts in this window handle delegation to panels
   WlrLayershell.keyboardFocus: root.isPanelOpen ? WlrKeyboardFocus.Exclusive : WlrKeyboardFocus.None
-  WlrLayershell.layer: Settings.data.ui.panelsOverlayLayer ? WlrLayer.Overlay : WlrLayer.Top
+  WlrLayershell.layer: WlrLayer.Top
   WlrLayershell.namespace: "noctalia-screen-" + (screen?.name || "unknown")
   WlrLayershell.exclusionMode: ExclusionMode.Ignore // Don't reserve space - BarExclusionZone handles that
 
diff --git a/Modules/Panels/Settings/Tabs/AboutTab.qml b/Modules/Panels/Settings/Tabs/AboutTab.qml
index 087b712b..919525f8 100644
--- a/Modules/Panels/Settings/Tabs/AboutTab.qml
+++ b/Modules/Panels/Settings/Tabs/AboutTab.qml
@@ -135,7 +135,7 @@ ColumnLayout {
   NDivider {
     Layout.fillWidth: true
     Layout.topMargin: Style.marginXXXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Contributors
diff --git a/Modules/Panels/Settings/Tabs/AudioTab.qml b/Modules/Panels/Settings/Tabs/AudioTab.qml
index 1e5098be..2133f5a1 100644
--- a/Modules/Panels/Settings/Tabs/AudioTab.qml
+++ b/Modules/Panels/Settings/Tabs/AudioTab.qml
@@ -143,8 +143,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // AudioService Devices
@@ -222,8 +222,8 @@ ColumnLayout {
   // Divider
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Media Player Preferences
@@ -397,7 +397,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/BarTab.qml b/Modules/Panels/Settings/Tabs/BarTab.qml
index 90acd077..b01e1f88 100644
--- a/Modules/Panels/Settings/Tabs/BarTab.qml
+++ b/Modules/Panels/Settings/Tabs/BarTab.qml
@@ -199,8 +199,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Widgets Management Section
@@ -275,8 +275,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Monitor Configuration
@@ -317,8 +317,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Signal functions
diff --git a/Modules/Panels/Settings/Tabs/ColorSchemeTab.qml b/Modules/Panels/Settings/Tabs/ColorSchemeTab.qml
index bc225cbd..f12decfa 100644
--- a/Modules/Panels/Settings/Tabs/ColorSchemeTab.qml
+++ b/Modules/Panels/Settings/Tabs/ColorSchemeTab.qml
@@ -301,8 +301,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
     visible: !Settings.data.colorSchemes.useWallpaperColors
   }
 
@@ -460,8 +460,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Template toggles organized by category
diff --git a/Modules/Panels/Settings/Tabs/ControlCenterTab.qml b/Modules/Panels/Settings/Tabs/ControlCenterTab.qml
index c12ef6a2..b19548ed 100644
--- a/Modules/Panels/Settings/Tabs/ControlCenterTab.qml
+++ b/Modules/Panels/Settings/Tabs/ControlCenterTab.qml
@@ -166,8 +166,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Widgets Management Section
@@ -230,8 +230,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Widgets Management Section
@@ -293,8 +293,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // ---------------------------------
diff --git a/Modules/Panels/Settings/Tabs/DisplayTab.qml b/Modules/Panels/Settings/Tabs/DisplayTab.qml
index 3690255e..ff863964 100644
--- a/Modules/Panels/Settings/Tabs/DisplayTab.qml
+++ b/Modules/Panels/Settings/Tabs/DisplayTab.qml
@@ -196,8 +196,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Night Light Section
@@ -367,7 +367,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/DockTab.qml b/Modules/Panels/Settings/Tabs/DockTab.qml
index 632a3826..e9784bea 100644
--- a/Modules/Panels/Settings/Tabs/DockTab.qml
+++ b/Modules/Panels/Settings/Tabs/DockTab.qml
@@ -137,8 +137,8 @@ ColumnLayout {
   NDivider {
     visible: Settings.data.dock.enabled
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Monitor Configuration
@@ -181,7 +181,7 @@ ColumnLayout {
   NDivider {
     visible: Settings.data.dock.enabled
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/GeneralTab.qml b/Modules/Panels/Settings/Tabs/GeneralTab.qml
index ca1c5ba0..80b282e9 100644
--- a/Modules/Panels/Settings/Tabs/GeneralTab.qml
+++ b/Modules/Panels/Settings/Tabs/GeneralTab.qml
@@ -61,8 +61,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Fonts
@@ -186,8 +186,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Language selection
@@ -227,8 +227,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   NButton {
diff --git a/Modules/Panels/Settings/Tabs/LauncherTab.qml b/Modules/Panels/Settings/Tabs/LauncherTab.qml
index 43eb7075..642d1ee8 100644
--- a/Modules/Panels/Settings/Tabs/LauncherTab.qml
+++ b/Modules/Panels/Settings/Tabs/LauncherTab.qml
@@ -147,7 +147,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/LocationTab.qml b/Modules/Panels/Settings/Tabs/LocationTab.qml
index 69f8c4fa..c2f264ce 100644
--- a/Modules/Panels/Settings/Tabs/LocationTab.qml
+++ b/Modules/Panels/Settings/Tabs/LocationTab.qml
@@ -57,8 +57,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Weather section
@@ -97,8 +97,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Date & time section
@@ -166,7 +166,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/LockScreenTab.qml b/Modules/Panels/Settings/Tabs/LockScreenTab.qml
index 2b9d0ea7..140ed960 100644
--- a/Modules/Panels/Settings/Tabs/LockScreenTab.qml
+++ b/Modules/Panels/Settings/Tabs/LockScreenTab.qml
@@ -25,7 +25,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/NetworkTab.qml b/Modules/Panels/Settings/Tabs/NetworkTab.qml
index 90e3216f..958a2842 100644
--- a/Modules/Panels/Settings/Tabs/NetworkTab.qml
+++ b/Modules/Panels/Settings/Tabs/NetworkTab.qml
@@ -29,7 +29,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/NotificationsTab.qml b/Modules/Panels/Settings/Tabs/NotificationsTab.qml
index 5b7a647d..b37f1d62 100644
--- a/Modules/Panels/Settings/Tabs/NotificationsTab.qml
+++ b/Modules/Panels/Settings/Tabs/NotificationsTab.qml
@@ -105,8 +105,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Duration
@@ -192,8 +192,8 @@ ColumnLayout {
 
     NDivider {
       Layout.fillWidth: true
-      Layout.topMargin: Style.marginXL
-      Layout.bottomMargin: Style.marginXL
+      Layout.topMargin: Style.marginL
+      Layout.bottomMargin: Style.marginL
     }
 
     // Monitor Configuration
@@ -230,7 +230,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/OsdTab.qml b/Modules/Panels/Settings/Tabs/OsdTab.qml
index 365b2396..906f8883 100644
--- a/Modules/Panels/Settings/Tabs/OsdTab.qml
+++ b/Modules/Panels/Settings/Tabs/OsdTab.qml
@@ -62,8 +62,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // General
@@ -108,8 +108,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Monitor Configuration
diff --git a/Modules/Panels/Settings/Tabs/ScreenRecorderTab.qml b/Modules/Panels/Settings/Tabs/ScreenRecorderTab.qml
index f1bed075..d5e45091 100644
--- a/Modules/Panels/Settings/Tabs/ScreenRecorderTab.qml
+++ b/Modules/Panels/Settings/Tabs/ScreenRecorderTab.qml
@@ -43,8 +43,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Video Settings
@@ -179,8 +179,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Audio Settings
diff --git a/Modules/Panels/Settings/Tabs/UserInterfaceTab.qml b/Modules/Panels/Settings/Tabs/UserInterfaceTab.qml
index c3bdee95..a4f55b4d 100644
--- a/Modules/Panels/Settings/Tabs/UserInterfaceTab.qml
+++ b/Modules/Panels/Settings/Tabs/UserInterfaceTab.qml
@@ -112,13 +112,6 @@ ColumnLayout {
       }
     }
 
-    NToggle {
-      label: I18n.tr("settings.user-interface.panels-overlay.label")
-      description: I18n.tr("settings.user-interface.panels-overlay.description")
-      checked: Settings.data.ui.panelsOverlayLayer
-      onToggled: checked => Settings.data.ui.panelsOverlayLayer = checked
-    }
-
     NDivider {
       Layout.fillWidth: true
       Layout.topMargin: Style.marginL
@@ -262,8 +255,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   // Dock
@@ -333,7 +326,7 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 }
diff --git a/Modules/Panels/Settings/Tabs/WallpaperTab.qml b/Modules/Panels/Settings/Tabs/WallpaperTab.qml
index 3876534c..018ac7d7 100644
--- a/Modules/Panels/Settings/Tabs/WallpaperTab.qml
+++ b/Modules/Panels/Settings/Tabs/WallpaperTab.qml
@@ -39,8 +39,8 @@ ColumnLayout {
   NDivider {
     visible: Settings.data.wallpaper.enabled
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   ColumnLayout {
@@ -159,8 +159,8 @@ ColumnLayout {
   NDivider {
     visible: Settings.data.wallpaper.enabled
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   ColumnLayout {
@@ -242,8 +242,8 @@ ColumnLayout {
   NDivider {
     visible: Settings.data.wallpaper.enabled
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   ColumnLayout {
@@ -393,8 +393,8 @@ ColumnLayout {
 
   NDivider {
     Layout.fillWidth: true
-    Layout.topMargin: Style.marginXL
-    Layout.bottomMargin: Style.marginXL
+    Layout.topMargin: Style.marginL
+    Layout.bottomMargin: Style.marginL
   }
 
   NFilePicker {