Too much lubrication where it BELONGS is not a problem. But, generally, keeping "too much" where it belongs is not possible. Thus it gets where it does not belong.
Lubrication on wheel treads, especially the drive wheel treads is a bad thing, the wheels will slip and the engine won't pull its train.
Lubrication is generally sticky (the IDEAL lubrication sticks to everything except itself, [think about it]) so it will hold any dirt that gets in it. If you get dirt in the excess lubrication, it will get carried into areas where you don't want dirt, like the areas that you want to be lubricated. Dirt is a "grit" that will scar the bearing material, which is wear, which is the opposite of what the lubrication is supposed to be doing.
Dirt makes the lubrication thicker which increases the friction and makes it harder for the lubricated parts to move in relation to each other, thus it is harder for the locomotive to pull the train.
It is not really possible to "over lubricate" but it is also not possible to keep the excess lubrication from having bad side effects.
It is best to apply oil in small amounts at the places where parts rub and while doing so have a clean rag in the other hand to wipe excess oil away so that it does not get where it should not be.