It is common for fretted instruments to have an overlay on the fretboard. It adds beauty, but more importantly, it should add a very smooth surface for playability and a hard surface for wear. Traditionally, for fine instruments, ebony has been the “standard” and is on almost all dulcimers that I have made. However, ebony continues to be very challenging to acquire and pure black heartwood is even more scarce. This is reflected in the price you see many builders charge for an ebony overlay.
Wood is graded on hardness by what is known as the Janka hardness test. It is the force required to push a .444” diameter steel ball half way into the board. For Ebony, this Janka average is around 3,220 pounds. A wood that I have recently been experimenting with is Katalox.
This wood has a red color to it and typically black streaks and woodgrain running through it. It has much more of a "wood look" than ebony. There are photos of Katalox in our gallery. Katalox is a bit tougher than ebony to machine, but it ends up beautifully smooth to the touch. Also, the Janka test for Kataloz is 3,660 pounds which makes it harder than ebony.
From my observations, Katalox is equally as good a fretboard overlay as ebony, and it is still wood. It's simply a matter of whether you like the black look of ebony or the woodgrain look of Katalox.