An overnight deposit is exactly what it sounds like — you deposit money with a bank for just one night and get it back the next business day with interest. It is the shortest possible fixed deposit, lasting roughly 12-24 hours.
Banks and large corporations use overnight deposits to park excess cash safely while earning a small return. Instead of leaving $50 million idle in a checking account earning nothing, a corporate treasurer deposits it overnight and earns one day's worth of interest.
The overnight rate (the interest rate on these deposits) is a critical benchmark in financial markets. Central banks target this rate to control monetary policy — the Fed Funds Rate, for example, is essentially the rate banks charge each other for overnight loans.