It is related to the Library and Information Science (LIS) concepts of document classification and subject indexing.
In LIS, the ideal number of terms that should be assigned to classify an item are measured by the variables precision and recall.
Assigning more category labels to each item will reduce the precision of each search, but increase the recall, retrieving more relevant results.
The worst case scenario is, of course, that even after reading the new document the user is unable to decide whether or not it might be useful if its subject matter is not thoroughly investigated.
Basically, the problem of overcategorization should be understood from the perspective of relevance and the traditional measures of recall and precision.