> var map;

Thats an empty variable called 'map' in global scope

> function initialize() {
...
>         var map = new google.maps.Map(document.getElementById('map'),

Thats a map object called 'map' in the scope of initialize(), when
initialize() completes it won't be accessible to other code


> function toggleLayer(overlay, checked) {
...
>     overlay.setMap(map);

This attempts to add an overlay to the empty variable in global scope.
No javascript error reported?

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