It's always funny to me when people say "overeducated", as if knowing things is only good up to a point. If you know too much, you suddenly turn bad.
A Jack of all trades is a master of none, but better than a master of one because he has broad, intersectional knowledge. Academia is designed for specialization and the more you specialize in something the more you lose the forest for the trees.
Everything looks like a nail if you are a hammer and all that.
Academic credentials and knowledge have very little correlation. A master electrician knows things. So does an airline pilot in charge of hundreds of lives. Yet neither has letters after their name.
When people use the term, it is obviously not a reference to just "knowing things" but rather 1) the distinct socialization one gets in academia that leaves one rather divorced from the real world (and I say that as an academic), and 2) hyperspecialization to the point one loses the big picture, a problem in education today.