On collision occurs when on the first tick an object overlaps another, and picks those objects. Even if it overlaps two objects at the same tick, it triggers on collision with only one object, picks that object and proceeds with the actions. After that it triggers on overlapping the other one.
It basically picked one object, destroyed it, picked the other one and destroyed that one.
With "Is overlapping" it checks whether each instance of an object is overlapping another one and picks all instances that do.