It's actually the opposite as you describe. A higher layer takes visible priority. So when displaying text or shapes on the screen, an object on layer 8 is "on top of" (or covers over) an object on layer 3, and there is no transparency (see through).
The tricky part is once you move your rectangle to highlight the next label, you have to redraw (or show) the changed areas of the screen. So the layers and screen management take some getting used to within uiFlow.
Here is an example flow of what you are looking to achieve.
Layers 0-3: reserved by uiFlow by default
Layer 4: rectangle
Layer 5: Label 1
Layer 6: Label 2
Layer 7: Label 3
Layer 8: Label 4
0_1615728306502_example.png
Note: In the M5StickC UI simulator on the left, you could manually change Labels 1 through 4 to all be on layer 5 and it will still work, since those labels do not overlap.