I studied the oil reservoir a bit and have a better understanding of the system. At the top of the tank is a baffle and a vent hose or hoses that goes either to the valve cover, or the air intake, or both. Possibly these hoses are intended to remove vapors and vent/control air pressure in the oil tank. I suppose this acts similar to a PVC system in a wet sump system and runs the oil vapors through the intake and burns them in the combustion chamber which is less polluting than just venting the vapors to the atmosphere.
All is fine as long as the venting system has vapors in it and not much oil droplets or liquid oil. A slight oil overfill might intermittently vent droplets or liquid oil such as during turns or when forces from hitting waves caused oil to splash up the oil tank vent connections. A more drastic overfill likely removes the air space near the vent, and fills the vent pipes with oil. This makes some oil go to the air box and wets the filter which can't flow when oil soaked, some gets run into the air intake for a smoky burn.
I think the system is really more tolerant of a slight overfill (one quart? possibly) than the alarm associated with overfill on these engines. I suspect this is due to how dramatic a severe overfill looks when it happens. A typical situation is when the partial change oil quantity is pumped out (about 2.1quarts without filter, 2.3 with filter) and then full system capacity is put back in (full system - 4.5 quarts) which results in an over 2 quart overfill. A 2 quart overfill may cause wetting of filter and lots of smoking from oil induced into the intake, all very alarming.
It just takes some getting used to that any oil change on the these engines is just a partial change, kind of like drain and fills on automatic transmissions. To do a full oil change requires several oil changes after running between, which usually isn't needed, but isn't that difficult with a good oil change pump. To really change the oil instead of just mixing new with old, likely would require about three partial changes.
I know my waverunner has been overfilled by possibly a quart a couple of times since new, but I've never seen any indications of what must happen with severe overfills