Prepare your USB Stick: mkfs.ext4 /dev/sda1

Install pacages on your router

opkg update;
opkg install block-mount kmod-usb-core kmod-usb-ohci kmod-usb-storage kmod-usb2 kmod-scsi-core kmod-scsi-generic kmod-fs-ext4 libblkid

Plug your USB Stick into your router

mount /dev/sda1 /mnt
tar -C /overlay -cvf - . | tar -C /mnt -xf -
umount /mnt

Edit fstab

block detect > /etc/config/fstab
vim /etc/config/fstab

Config:

root@LEDE:~# cat /etc/config/fstab
config 'global'
        option  anon_swap       '0'
        option  anon_mount      '0'
        option  auto_swap       '1'
        option  auto_mount      '1'
        option  delay_root      '5'
        option  check_fs        '0'

config 'mount'
        option  target  '/overlay'
        option  uuid    '<uuid>'
        option  enabled '1'
        option  fstype  'ext4'

Check

root@LEDE:~# df -h
Filesystem                Size      Used Available Use% Mounted on
/dev/root                 2.3M      2.3M         0 100% /rom
tmpfs                    13.8M      1.0M     12.7M   8% /tmp
/dev/sda1                28.1G     46.5M     26.6G   0% /overlay
overlayfs:/overlay       28.1G     46.5M     26.6G   0% /
tmpfs                   512.0K         0    512.0K   0% /dev