Overrated just means 'other people like it more than I do'
It describes how one feels about an artist relative to how they are viewed by others. For example, calling a band shit is pretty absolute, yet it's possible to like an artist whilst still feeling they're overrated.
It's an expression of personal opinion, not an objective critique.
Thing is though, seeing how badly Kings Of Leon get slated these days I fail to see how they're overrated. In fact seeing how many people avoid their great early albums based on current reputation I'd argue that their early albums are in fact underrated.
You described it well. But it's not just about the rest of the world's opinion. It can also be about how one person feels about a band relative to one other person's opinion of the band. If a friend of yours thinks that The Beatles is the worst band ever, and you like them, then you would think that your friend underrates The Beatles.
And yes, one can like an artist and still feel that artist is overrated. Similarly, one can dislike an artist but still feel that that artist is criticised too much, and is underrated.
I can almost forgive Kings of Leon for their recent crimes against music on the basis that they did make one absolutely perfect song early in their career:
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