Delegation is the process by which one can assign the baking and endorsing rights of their tokens to another baker to perform those actions on their behalf. The nominated baker charges a small fee for doing so.
Over-delegation happens when a baker has XTZ delegated to it and puts up too few XTZ as a security deposit. The security deposit is used during each cycle for baking and endorsing, and when it runs out, the baker will miss it’s remaining baking and endorsing slots.
The total reward during a cycle is capped based on the available bond, so we do not recommend delegating to over-delegated bakers, as delegates run the risk of getting a reduction in or no participatory rewards.