This term is frequently bandied about in gliding circles.  I HATE IT as it is used to describe two distinct phenomena.

Convection starts in a promising manner with excellent cumulus.  On occasions, it can remain excellent all day.
But all too often, things go wrong by the early afternoon.  Two common problems are spreadout and shower formation
Both these are frequently referred to by that word "overdevelopment" but the causes are totally different.
However, the effect can be very similar - the sky becomes covered with cloud and with the sun cut off, thermals die
spreadout image Spreadout - the ominous beginnings
Spreadout occurs when the convection cannot go any higher and hits a "lid".  This lid is commonly referred to as an inversion, but strictly speaking, an inversion implies that the temperature of the air increases with height. 
A lid or cap, even when the temperature is isothermal (the same through several thousand feet) has the same effect.

A typical sounding is shown on right and the very moist layer (where the two lines coincide) almost guarantees spreadout.

spreadout sounding
shower image -Shower development - typical sky
The sounding on right was a typically showery situation.
But it was equally easy to forecast.
Huge showers were expected and duly arrived.
One pilot reported in excess of 10 knots in one cloud-
shower sounding
I was forecasting for competitions on both these days - it was easy! (for me)