diff --git a/esphome/components/esphome/ota/ota_esphome.cpp b/esphome/components/esphome/ota/ota_esphome.cpp
index 045aa133d64..f9133a515f6 100644
--- a/esphome/components/esphome/ota/ota_esphome.cpp
+++ b/esphome/components/esphome/ota/ota_esphome.cpp
@@ -223,20 +223,22 @@ void ESPHomeOTAComponent::handle_handshake_() {
       this->ota_features_ = this->handshake_buf_[0];
       ESP_LOGV(TAG, "Features: 0x%02X", this->ota_features_);
       this->transition_ota_state_(OTAState::FEATURE_ACK);
+
+      const bool supports_compression = ((this->ota_features_ & CLIENT_FEATURE_SUPPORTS_COMPRESSION) != 0 &&
+                                        this->backend_->supports_compression());
 #ifdef USE_OTA_PARTITIONS
       this->extended_proto_ = this->ota_features_ & CLIENT_FEATURE_SUPPORTS_EXTENDED_PROTOCOL;
       if (this->extended_proto_) {
-        this->handshake_buf_[0] = ota::OTA_RESPONSE_FEATURE_FLAGS;
-        this->handshake_buf_[1] = 0;
-        if ((this->ota_features_ & CLIENT_FEATURE_SUPPORTS_COMPRESSION) != 0 &&
-            this->backend_->supports_compression()) {
+        // If the client supports the extended protocol, send 2 bytes: response type and server feature flags
+        this->handshake_buf_[0] = ota::OTA_RESPONSE_FEATURE_FLAGS; // indicates the following byte contains feature flags
+        this->handshake_buf_[1] = SERVER_FEATURE_SUPPORTS_PARTITION_ACCESS; // supported if USE_OTA_PARTITIONS
+        if (supports_compression) {
           this->handshake_buf_[1] |= SERVER_FEATURE_SUPPORTS_COMPRESSION;
         }
-        this->handshake_buf_[1] |= SERVER_FEATURE_SUPPORTS_PARTITION_ACCESS;
       } else {
 #endif
-        this->handshake_buf_[0] =
-            ((this->ota_features_ & CLIENT_FEATURE_SUPPORTS_COMPRESSION) != 0 && this->backend_->supports_compression())
+        // Standard protocol without server feature flags
+        this->handshake_buf_[0] = (supports_compression)
                 ? ota::OTA_RESPONSE_SUPPORTS_COMPRESSION
                 : ota::OTA_RESPONSE_HEADER_OK;
 #ifdef USE_OTA_PARTITIONS
diff --git a/esphome/components/ota/ota_backend_esp_idf.cpp b/esphome/components/ota/ota_backend_esp_idf.cpp
index 269d9153b2b..3e79b69e674 100644
--- a/esphome/components/ota/ota_backend_esp_idf.cpp
+++ b/esphome/components/ota/ota_backend_esp_idf.cpp
@@ -178,6 +178,10 @@ void IDFOTABackend::abort() {
 }
 
 #ifdef USE_OTA_PARTITIONS
+static inline bool check_overlap(uint32_t a_offset, size_t a_size, uint32_t b_offset, size_t b_size) {
+    return (a_offset + a_size > b_offset && b_offset + b_size > a_offset);
+}
+
 OTAResponseTypes IDFOTABackend::update_partition_table() {
   int num_partitions;
   if (this->buf_written_ == 0 || this->image_size_ != this->buf_written_) {
@@ -239,28 +243,32 @@ OTAResponseTypes IDFOTABackend::update_partition_table() {
   // Check if the required app and otadata partitions exist in the new partition table
   // Check which app slot to boot from in the new partition table
   int app_partitions_found = 0;
-  int app_index = -1;
-  int app_index_with_copy = -1;
-  int otadata_index = -1;
-  bool otadata_no_overlap = false;
+  int new_app_part_index = -1;
+  int new_app_part_index_with_copy = -1;
+  int new_otadata_part_index = -1;
+  bool otadata_overlap = true;
   const esp_partition_t *app_copy_target_part{nullptr};
-  for (int i = 0; i < num_partitions; i++) {
+  for (int i = 0; i < num_partitions; i++) {  // Iterate over new partition table
     const esp_partition_info_t *new_part = &new_partition_table[i];
     if (new_part->type == ESP_PARTITION_TYPE_APP) {
+      // Found an app partition in the new partition table
       app_partitions_found++;
       if (new_part->pos.size >= running_app_size) {
+        // Running app can fit inside this partition
         if (new_part->pos.offset == running_app_offset) {
-          app_index = i;
-        } else if (new_part->pos.offset >= running_app_offset + running_app_size ||
-                   running_app_offset >= new_part->pos.offset + running_app_size) {
-          // New app partition has no overlap with running app
+          // This new app partition can be used for the running app without copying because the offsets are the same
+          new_app_part_index = i;
+        } else if (!check_overlap(running_app_offset, running_app_size, new_part->pos.offset, running_app_size)) {
+          // This new app partition can be used for the running app after copying the app into it
+          // Check if there is an app partition in the old partition table at the right offset
+          // This is for esp_partition_copy and won't be needed after implementing a better copy function in the future
           esp_partition_iterator_t it = esp_partition_find(ESP_PARTITION_TYPE_APP, ESP_PARTITION_SUBTYPE_ANY, NULL);
           while (it != NULL) {
             const esp_partition_t *p = esp_partition_get(it);
             if (p->address == new_part->pos.offset && p->size >= running_app_size) {
-              // App partition exists in old and new partition table
-              app_index_with_copy = i;
-              app_copy_target_part = p;
+              // Found a suitable pair of partitions in the old and new partition table to copy the running app to
+              new_app_part_index_with_copy = i;  // The partition index in the new partition table
+              app_copy_target_part = p;  // The partition in the old partition table
             }
             it = esp_partition_next(it);
           }
@@ -268,20 +276,20 @@ OTAResponseTypes IDFOTABackend::update_partition_table() {
         }
       }
     } else if (new_part->type == ESP_PARTITION_TYPE_DATA && new_part->subtype == ESP_PARTITION_SUBTYPE_DATA_OTA) {
-      otadata_index = i;
-      otadata_no_overlap = new_part->pos.offset >= running_app_offset + running_app_size ||
-                           running_app_offset >= new_part->pos.offset + new_part->pos.size;
+      // Found the otadata partition in the new partition table
+      new_otadata_part_index = i;
+      otadata_overlap = check_overlap(running_app_offset, running_app_size, new_part->pos.offset, new_part->pos.size);
     }
   }
-  if (app_index == -1 && app_index_with_copy == -1) {
+  if (new_app_part_index == -1 && new_app_part_index_with_copy == -1) {
     ESP_LOGE(TAG, "No compatible app partition found in the new partition table");
     return OTA_RESPONSE_ERROR_PARTITION_TABLE_VERIFY;
   }
-  if (app_partitions_found < 2 || otadata_index == -1) {
+  if (app_partitions_found < 2 || new_otadata_part_index == -1) {
     ESP_LOGE(TAG, "New partition table is missing the required app or otadata partitions");
     return OTA_RESPONSE_ERROR_PARTITION_TABLE_VERIFY;
   }
-  if (!otadata_no_overlap) {
+  if (otadata_overlap) {
     ESP_LOGE(TAG, "New otadata partition overlaps with running app");
     return OTA_RESPONSE_ERROR_PARTITION_TABLE_VERIFY;
   }
@@ -292,7 +300,7 @@ OTAResponseTypes IDFOTABackend::update_partition_table() {
   nvs_flash_deinit();
 
   // Copy the running app partition to new position if needed
-  if (app_index == -1) {
+  if (new_app_part_index == -1) {
     const esp_partition_t *running_app_part = nullptr;
     esp_partition_iterator_t it = esp_partition_find(ESP_PARTITION_TYPE_APP, ESP_PARTITION_SUBTYPE_ANY, NULL);
     while (it != NULL) {
@@ -341,7 +349,7 @@ OTAResponseTypes IDFOTABackend::update_partition_table() {
   esp_partition_iterator_t it = esp_partition_find(ESP_PARTITION_TYPE_APP, ESP_PARTITION_SUBTYPE_ANY, NULL);
   while (it != NULL) {
     const esp_partition_t *p = esp_partition_get(it);
-    const esp_partition_info_t *new_part = &new_partition_table[app_index == -1 ? app_index_with_copy : app_index];
+    const esp_partition_info_t *new_part = &new_partition_table[new_app_part_index == -1 ? new_app_part_index_with_copy : new_app_part_index];
     if (p->address == new_part->pos.offset) {
       new_boot_partition = p;
     }
diff --git a/tests/components/ota/test-partition_access.esp32-idf.yaml b/tests/components/ota/test-partition_access.esp32-idf.yaml
new file mode 100644
index 00000000000..0cbf8549520
--- /dev/null
+++ b/tests/components/ota/test-partition_access.esp32-idf.yaml
@@ -0,0 +1,5 @@
+ota:
+  - platform: esphome
+    allow_partition_access: true
+
+<<: !include common.yaml
diff --git a/tests/components/ota/test.esp32-idf.yaml b/tests/components/ota/test.esp32-idf.yaml
index 0cbf8549520..dade44d145b 100644
--- a/tests/components/ota/test.esp32-idf.yaml
+++ b/tests/components/ota/test.esp32-idf.yaml
@@ -1,5 +1 @@
-ota:
-  - platform: esphome
-    allow_partition_access: true
-
 <<: !include common.yaml