Why Is overlay(e.g. health bar) not rendered first since it can prevent overdraw?

because then you could not have semi transparency on your health bar, no nice soft alpha'd edges. only hard pix-elated(aliased) edges.

UI is generally drawn after 3d scene geometry since the 3d scene as well es the UI has to use the same depth buffer. The camera maps the whole viewing frustum to the whole depth buffer range. If you draw UI first it would be possible that you get z fighting with geometry that clips into the near clipping plane.

I've seen some cases where they essentially mask out large opaque UI areas first by just writing into the depth buffer, then rendering the scene and finally rendering the UI on top of the mask regions. However depending on the size of the UI stuff it's usually not worth doing this. Some older strategy games actually had a seperate viewport for the 3d view and the UI around. So the viewport already clips everything the UI covers. However most modern UI design is an actual HUD over the game scene and often contains semi transparent elements.

How much performance overdraw costs highly depends on the platform and how complex the actual 3d scene behind the UI actually is. The screen space UI generally is drawn last and as far as i know starts with a completely cleared depth buffer.