Overselling essentially means that you, as a reseller, can sell more resources than are actually available in your Reseller Hosting package. This is done by calculating quota based on utilization instead of allocation. For example:
You purchase our Essential Plan (40GB Space, 400 GB B/W, no overselling). If you create an account in this package with 1GB space and 10GB b/w, these values will be deducted from your quota, so you will have 39GB Space and 390GB b/w left. This is regardless of how much your customer actually uses. This means your quota is deducted based on allocation.
In the case where overselling is allowed:
Your purchase our Starter Plan (20GB space, 200GB b/w, overselling enabled). In this case, you can create an account with 100GB Space and 1000GB b/w, but these values will not be deducted from your quota. This is because your quota will now be deducted based on how much your customer uses, and not based on how much you have allocated. Therefore, you can create up to 20 accounts, and allocated space and b/w which is much higher than what has been allocated to you (20GB and 200GB in this case). In essence, you are overselling to your customers because you do not expect them to use the resources you have allocated to them.