This feature means a subscriber's recurring order can generate even when the product is out of stock.
To set Subscriptions to allow overselling, navigate to Settings -> General, and configure this setting to "Allow overselling". This setting will not affect initial orders placed on your Shopify store in the checkout. It will only affect their future recurring orders.
Note: If you have the "Allow overselling" option selected, it will decrease the product inventory levels in Shopify. It will go into negative numbers if the product is out of stock.