Maybe we should clarify that "overwrite" means that as the step indicator passes over a step it is erased and overwritten, so that means if you hit stop while the indicator is at step 10, then anything on steps 11-16 is not overwritten.
I would think this is the preferred recording mode (at least for me) because I usually need two or three measures to get ‘in the groove’. As it works now, I just get a bunch of takes stacked on top of each other. In overwrite I can get in the groove, get a good take and hit stop immediately after. This seems more musically possible than hitting start and getting the first take spot on. Again, this may be down to my amateur skills in playing things live (out of time, etc).