You can find this option by this path Design tab -> Popup Location tab -> «Enable Layered PopUp Style». By default all PopUps have modal style: it appears on user screen over the whole site. Layered style allows you to show your PopUp – on selected position: top, bottom, etc. and not over your site – but right near your content.
Just check the examples of such PopUps on this page below. This feature are included in PRO version of PopUp plugin.
Note! If you enable Layered PopUp Style, in this case Background overlay option will not work.