Before trains, sea travel was the standard way to travel long distances even if a land route was available. Sea voyages came to represent any destination that was far enough away that communities wouldn’t be in regular contact.

Why do you drive on a parkway and park on a driveway.

Language is a living thing, it evolves as time progresses.

“Oversea” is currently synonymous with “abroad”. When it was first came to use, geography wasn’t as much advanced as it is today.

See https://en.wiktionary.org/wiki/oversea

A few factors:

• Human population centers historically were built by natural waterways and/or by the sea, to enable access to trade, seafood, and obviously, water for drinking and agriculture
• When the fastest mode of land transport is a horse (ie no railways or automobiles), the long-distance roads between nations which existed up to the 1700s were generally unimproved and dangerous, both from the risk of breakdown but also highway robbery. Short-distance roads made for excellent invasion routes for an army, and so those tended to fall under control of the same nation.
• Water transport was (and still is) capable of moving large quantities of tonnage, and so was the predominant form of trade, only seeing competition when land transport improved and air transport was introduced.

So going back centuries when all the “local” roads are still within the same country (due to conquest), and all the long-distance roads were treacherous, slow, and usually uncomfortable (ie dysentery on the Oregon Trail), the most obvious way to get to another country would have been to get a ride on a trading ship. An island nation would certainly regard all other countries as being “overseas”, but so would an insular nation hemmed in by mountains but sitting directly on the sea. When land transport is limited, sea routes are the next best. And whereas roads only connect places situated along the route, the sea (and the sky) allow point-to-point trading, exposing faraway countries to each other when their ships arrive at the port.

TL;DR: for most of human history, other countries were most reasonably reached by sea. Hence “overseas”.

I think the term “Chinese diaspora” is more appropriate.

edit : What I mean is that this word (overseas) no longer necessarily reflects today’s reality; it should be obsolete, like many other words nowadays. Languages are alive.