First off, Why is over-healing considered to be so bad? I mean, I understand not using flash heal when they're at 95% health, that's just a waste, but if it overheals by a few hundred or in cata numbers a thousand, what's the big harm?
I don't have a priest, just a druid, but i'll answer this question because druids had a huge habit of overhealing pre-patch.
Consider this experiment. Take a cup and fill it with water all the way to the top. Now, keep pouring water and watch it overflow down the sides of the cup.
Why are you doing that?
Unless someone was drinking the water out of the cup, there's no reason to keep pouring more into it. It's full isn't it? It doesn't get any more full than before right? That extra water is being wasted and serves no purpose.
For my case as a druid, there was a difference between overhealing and pre-hotting. Pre-HoTing was putting rejuvenation or regrowth (or both) on the tank while he was about to pull a mob or boss, and that healing is taken the instant he pulls. Over-healing is like casting regrowth, rejuvenation, 3 stacks of lifebloom, wild growth, and a few spam nourish and HT's when I know that a simple rejuvenation will cap him for a while. If a tank was at 98% HP and I wanted to heal him, I would rather a rejuvenation cap a tank and give him an extra 2000 overheal, than cast Healing Touch and give him a whopping 15,000 overheal. You use what ever is more efficient for his health. There is no "2% heal" spell. Overhealing will always happen, it's situational depending on the boss and his attacks/damage moves and what spells you use.
A lot of healers will treat over-healing as a sort of pre-hotting like what druids do. As healers, we love it when everyone can be easily capped as far as their HP, so why not make it easiER by casting more than enough HoT spells on them? The slightest dent in a tank or dps will instantly be covered up by the healing spell(s) we casted on them. We're doing our job!! Right?
But why? Why that many spells? We all know deep down that they don't need that much healing to live, so why do we continue to spam healing when one cast will cap them for a good 5-7 seconds? Mabye it's out of habit, mabye it's to "be safe." Or perhaps, if you are a skilled healer, you never go OOM even if you do overheal, so why not?
Anyway, all that extra healing that isn't necessary is over-healing. You don't need to do it, and the receiver doesn't need it either, he just wants to stay alive, not necessarily capped.