What does it mean when it asks if I want to apply my overpayment to my minnesota tax?

An overpayment is your refund.   You can have them keep all or part of your refund as an estimated payment towards next year's tax return.  But most people want to get their refund now.   So to get your refund now pick do not apply it to next year.

To change the entry you made to apply your  Federal refund to next year

Federal Taxes Tab or Personal (H&B version)

Other Tax Situations

Additional Tax Payments

Apply Refund to Next Year - Click the Start or Update button and answer NO or delete the amount.

For state go through the State tab again, probably near the end and look for that screen again to change it.  Change it to No and delete the Amount

If you have a Minnesota overpayment it means you paid more taxes than you owe and you are due a refund.

The question of if you want to apply your overpayment to your next year's taxes is asking if you do NOT want that refund and instead want to leave it on your "account" with Minnesota.  If you never owe tax, you can answer that you do not want to do that.  Then you will get the refund you are owed.