I can't speak for everyone, but for me overdiagnosing definitely did more harm than good. Probably because I felt like there was something severely wrong with me and I was confused about why, when I brought up past things, therapists didn't want to talk about it or would defend the things that happened. So eventually I just figured nothing worth conversation had happened and that the problem was me.
The hardest diagnosis to deal with was borderline personality disorder. My therapist thinks I was given that one because I self harmed and tried to kill myself a lot. But I was treated as a manipulator and a liar after I was given that diagnosis, so I think part of the issue was that mental health workers simply didn't believe me when I brought up past things (because of what they diagnosed me with).