Your product can be oversold due to the following reasons
1) If the same product is linked to multiple listings.
Lets say the current stock of your SKU is 1. This means the stock of all your listings linked to this SKU is 1. So the customer can add the same product through different listings to the same order. Thus, the SKU could be oversold.
In order to avoid this, its good to use close at quantity. Please check this help guide.
2) If you are selling 2 bundles having common components. Or selling components as a standalone item as well as through a bundle.
Lets say the component A is present in a bundle and also being sold as a standalone item. Now the component can be oversold if customer purchases the bundle and the component through the same order.
In order to avoid this, its good to use close at quantity. Please check this help guide.