Reply To: Overlapping layers puzzle

You are not missing anything. If you have A overlap B, and B overlap C, then you cannot have C in turn overlap A. Even in Illustrator and Photoshop this cannot be done — layers have a fixed order.

You can, however, make a mask out of one of your circles with the Pathfinder. Put this to just the top layer; it’s not live (because that can’t be done) but it should be ‘good enough’.