The main reason for overscan is that in the old days, on CRT displays, the edges of the tube-projected image was heavily distorted (it still is, but considerably less so with modern technology). So, the TV manufacturers covered this part of the image up with a "bezel", now made of plastic.
Later on, as broadcasting evolved, this unused portion of the video stream became used for embedding "extra data" in the image, which the TV could extract from the video stream, decode, and use for other purposes such as sync and closed captioning (that's those white lines). Standard NTSC/ATSC broadcast has a total of 525 lines, but only 486 of these are considered "visible". The actual amount of overscan varies considerably from display to display, so 90% of those 486 lines are considered "action safe" (meaning you can assume the viewer can see them), and only 80% are considered "Title Safe" (meaning they'll be non-distorted and centered enough that it's safe to use them for text).
Current flat panel displays also have a portion of the image overscanned because of the backlight in the displays. The florescent tube backlights are not perfectly diffused behind the LCD/plasma panel, which results in an image that gets progressively dimmer as you approach the edges of the panel. This brightness distortion is VERY apparent right at the edges of the display (and gets worse over time as the backlight ages), so manufacturers cover the edges of the panel up with a plastic bezel. Newer OLED and LED-backlit displays won't suffer from this issue (at least anywhere near as much) but they are still absent or rare in the marketplace thus far.