It was both: an oversell due to being overweight. There are a number of reasons why an aircraft might have to carry fewer passengers than seats (broken seats, weight limitations, customers of size, etc.), and although the airlines try to know how many seats will actually be available to be occupied in advance, sometimes things happen at the last minute (a seat breaks, headwinds are too strong). In any of these cases, when more confirmed passengers show up than seats are available to be occupied, it is an oversell, and any locally mandated denied boarding rules should apply.

As far as the remedy, as other posters have noted, the regulations that apply could be dependent on both the home nation of the carrier and/or where the flight was operating.