Yes you assumed right! I initially wanted the overlaps to connect more like the Witness, but that ended quickly. Absolutely loved that game. Love to meet a fellow fan :)
The behaviour uses raycasts. I track where the click started. look for overlaps (using RaycastAll) to transfer the focus. There's also a hidden flat collider that centers on the cursor and looks at the camera, just in case the player's mouse is still clicked and moves off foliage. It's to help avoid having to reselect. The colours/recolours were a custom shader that used the mouse tracking as parameters (point on start side of foliage, mouse position, opposite side of foliage). It moves in reverse if the transfer doesn't complete.
Thanks for playing. I'm so glad you enjoyed it!