This is why, in the UK system, you're only allowed to apply to five or fewer universities in the same academic cycle. (It's possible to enforce this because all applications go through the same centralised system.)

You're also not allowed to apply to both Oxford and Cambridge in the same year - otherwise both universities would get twice as many applicants.

Honestly it wouldn't be as big of a deal if colleges accepted more applicants than they have seats for. The UofMN does just that and has a 70% acceptance rate and is a top public school. They have yet to run into any problems by doing so. While this might not work for colleges in say California or Ivy Leagues, for competitive and selective schools it's definitely an option almost none of them do.

Colleges do overadmit, including elite colleges, because a predictable percentage decline the admission.

The term for the percentage of accepted students who enroll is “yield”.

Every college predicts its yield and admits enough extra to get a full class. It’s basic college admissions.

https://en.m.wikipedia.org/wiki/Yield_(college_admissions) https://www.thoughtco.com/what-is-yield-788445

It's suboptimal. It involves a lot of guessing on the applicant's part as to which university is suitable for them. There is a huge possibility for mismatch

common app is over 20 years old.