Overly means more than is good or reasonable. Overly cautious, not overly impressed, overly complicated.
It always carries criticism, so nothing is overly good. Not overly is a British understatement meaning not very. Some writers object to the word and prefer over- attached directly, as in overcautious, though both are perfectly standard.
1adverboverlyMore than is good or reasonable.
“The teacher was overly strict and punished children for tiny mistakes.”
overly is a degree.
From over + -ly.
Etymology from Wiktionary, CC BY-SA