Dude.
ObjectA Is overlapping ObjectB
This picks all ObjectA's that overlap any ObjectB. And all ObjectB that overlap any ObjectA. It is in the first place about picking.
Secondly, yes, when there is no object ObjectA picked or/and no ObjectB, the condition marks itself as not do-able: or the logical state untrue.
(handy to follow up with an else)
True or untrue depends on the resulting picklist, not on a Basic wise IF statement.
When the condition is true, it runs its actions/subs, and in most cases we use the list of the picked objects to work with.
Or we refine the picklist with more conditions.
When the condition is untrue, it will not run its actions.
You are addressing an unreferenced object in an action. Therefor you only use, what you perceive as, the logical part of the condition. The IF THEN as you like to call it.
Addressing unreferenced objects is always something that you need to think trough.
I showed you in a capx how to deal with that. I think that was helpful and on topic.