Frode Berg wrote:

When you say "overhaul", what does this imply?
Is it an engine change, or just a major visit to the shop going through
everything and changing whatever is needed?

As Bob Noel says, they take the engine apart and make sure that every part meets
the specifications for reinstallation (the "service limits"). Some people prefer
to make sure that all parts meet the specifications for new parts. The key is
that this can be done by any competent mechanic; the engine does not have to go
back to Lycoming or Continental.

Shop policies also differ. When Lycoming overhauls an engine, they replace all
the cylinders and pistons with new ones. A local shop may recondition the old
cylinders and reuse them. A cylinder on something like an O-320 can typically
last 5,000 hours or so before it becomes risky to use it.

The bottom line is that getting an overhaul done by one of the major shops can
save you several thousand dollars over getting one done by Lycoming, and having
one done locally (called a "field overhaul") can save you even more. I've even
known some people to overhaul the engine themselves. This requires that a
certified mechanic oversee the work.

George Patterson
Great discoveries are not announced with "Eureka!". What's usually said is
"Hummmmm... That's interesting...."