No it is inlay, put the piece with the elephant pattern on top of the box lid, secure it.
then you cut the pattern at an angle, bevel cut, when you separate the two pieces, the top piece you cut drops into the box lid (after you separate the main pieces). The angel you cut at determines how far down into the box lid the cut drops. I fiddled, and am still fiddling with the angle so that the drop in piece sits only a 64th proud so I can sand it smooth. The angle depends on the thickness of the two pieces of wood too and the blade you use. Basically you experiment with the wood and angle on scrap, and hope it works the same on the real thing.