You are misinterpreting the law.
It is convenient to discuss these matters by referring to Taiwan citizens as “Type 1 nationals” and overseas Chinese as “Type 2 nationals.”
The Type 1 nationals have household registration and an ID card, and of course can get a passport. The Type 2 nationals only get a passport. Additionally, we can separate these Type 2 nationals into “Type 2 dual nationals” and “Type 2 single nationals.” Obviously, the “Type 2 dual nationals” also have citizenship in another country … but the “Type 2 single nationals” don’t.
(Herein, I will discuss this in the “masculine” way, but of course the same analysis applies to men or women, he or she, him or her … ) So … if a Type 2 national wants to come to Taiwan, he/she has to get a short-term visa. If he/she meets the conditions to get the short-term visa (and not everyone does … normally speaking no visa will be granted to a Type 2 single national when he does not have at least firm residency rights, or permanent residency rights in another country, … since of course this person would be most likely to overstay his visa in Taiwan … ). But with a short-term visa, then this person can come to Taiwan, which is after all his country.
In Taiwan, if the Type 2 national meets the Article 9 qualifying criteria, he can apply for residency. If not, he has to leave after the visa is up … and can be forcefully deported. Of course, sometimes these visas can be extended, but at any rate the visa will expire sometime …
After obtaining residency, there are additional requirements for obtaining household registration and an ID card, to complete the process to become a Type 1 national.
Over the years I have met many many overseas Chinese from various countries in S.E. Asia who have overstayed their short term visas in Taiwan and do not qualify for residency rights … much less for upgrading to Type 1 national status.