Too high or too low temperatures will have adverse effect on the PCR. When you have too high overshoot, especially at denaturation step, you run the risk of killing off some enzyme activity (Figure 1B: Thermal cycler B with overshoot of more than 10°C). Such reduction in enzyme half-life (especially when it happens repetitively at every cycle in a PCR reaction) can decrease the total PCR yield.
Similarly, when you have a “high” undershoot (large dip in temperature), especially when applied to going down from denaturation step to annealing step, it is effectively lowering the stringency of specific primer annealing. For example, if you set annealing to 65°C, but it stays at 5°C below that temperature for many seconds due to undershoot, it can increase the chances of non-specific amplification during that period of time (Figure 1).