How can I make a CSS glass/blur effect work for an overlay?

I am having trouble applying a blur effect on a semi-transparent overlay div. I'd like everything behind the div the be blurred, like this:

Here is a jsfiddle which doesn't work: http://jsfiddle.net/u2y2091z/

Any ideas how to make this work? I'd like to keep this as uncomplicated as possible and have it be cross-browser. Here is the CSS I'm using:

#overlay {
    position: absolute;
    left: 0;
    top: 0;
    right: 0;
    bottom: 0;

    background:black;
    background:rgba(0,0,0,0.8);

    filter:blur(4px);
    -o-filter:blur(4px);
    -ms-filter:blur(4px);
    -moz-filter:blur(4px);
    -webkit-filter:blur(4px);
}

Solution 1:

For a more simple and up to date answer:

backdrop-filter: blur(6px);

Note browser support is not perfect but in most cases a blur would be non essential.

Solution 2:

Here is an example that uses svg filter.

The idea is to use an svg element with height same as the #overlay and apply the feGaussianblur filter on it. This filter is applied on an svg image element. To give it an extruded effect, you could use a box-shadow at the bottom of the overlay.

Browser Support for svg filters.

Demo on Codepen

body {
  background: #222222;
}
#container {
  position: relative;
  width: 450px;
  margin: 0 auto;
}
img {
  height: 300px;
}
#overlay {
  position: absolute;
  left: 0;
  top: 0;
  width: 100%;
  z-index: 1;
  color: rgba(130, 130, 130, 0.5);
  font-size: 50px;
  text-align: center;
  line-height: 100px;
  box-shadow: 0 3px 5px rgba(0, 0, 0, 0.3);
}

<div id="container">
  <img src="http://lorempixel.com/450/300/sports" />
  <div id="overlay">WET</div>
  <svg width="450" height="100" viewBox="0 0 450 100" style="position: absolute; top: 0;">
    <defs>
      <filter id="blur">
        <feGaussianBlur in="SourceGraphic" stdDeviation="3" />
      </filter>
    </defs>
    <image filter="url(#blur)" xlink:href="http://lorempixel.com/450/300/sports" x="0" y="0" height="300px" width="450px" />
  </svg>
</div>