The idea is that you have a seat for takeoff and landing - in this case potentially tighter as you are in it for only short periods of time - and then move down to the beds once in the air. Obviously this is for real long haul flights. The idea has been around for a long time- I think it was technically offered at one point, but could be wrong. They already make them - they are used for crew rests, look them up on google images. The big issue is the evacuation requirements, but that is probably easily overcome.

As for the overhead space - that was a Boeing idea for the 747. If you look at the cross section of a wide-body airliner there is a lot of space above the bins because the fuselage is a circle more or less. Again it already exists on A330s for crew rests.