No, the changes did not happen "overnight." I don't think there's anyone arguing that such a change would happen in a short period of time. It's doubtful that any squirrels were running around with lots of "flappy, unflyable skin." A sequence that makes sense would be that a few of the critters in a population had a little more skin on their sides than the rest of the population. Over time, those with the extra skin were able to jump farther and therefore more easily avoid predators and/or find more food and mates. More skin between the fore and hind legs led to better and longer gliding flights...those lacking this adaptation would have to run down trees, cross the ground, and run back up...a lot of expenditure of energy and exposure to predators that those with wingflaps aren't exposed to. Eventually, those with the wingflaps become a separate species from those without the extra skin.
Any of them that had a whole bunch of extra flappy skin would be less likely to be able to glide or climb well, and would also be selected against by predation and energy expended to move about.
Thinking of an evolutionary change as a "forfeit" of something is not correct. What happens is that in a population, some individuals develop minor differences that give them some minor edge. If the ancestors of birds 'forfeited' their front legs, it was because what they gained by having front appendages devoted to flight gave them an advantage over those in the population that didn't have those.
Again, incrementally, the differences would have developed. Starting with a population of a species that had developed feathers (which are modified scales of skin), some were better able to survive and reproduce because those feathers helped in some way...avoiding predators, spending less energy finding food, appealing to members of the opposite sex, or so on...those whose feathers didn't help them in relation to these selection pressures either died out, or evolved towards other evolutionary solutions...that is, would eventually become a different species.
Frankly, if all you can imagine is a wing for slapping prey around, then I think that you aren't trying very hard. And even a slight advantage in being able to capture prey by slapping them around, or to avoid predators, or to attract mates (My! What pretty wings you have, my dear!) would be enough to make such a trait widespread in a population in just a few generations.
Just as with the flying squirrel, just a small advantage by being able to glide farther or longer or with more control than other members of the population would be enough to successfully adapt to the pressures (predation, mate appeal, etc.) to reproduce and survive as a population.