My understanding of oil, in any engine:
PRESSURE forms the hydraulic wedge on "plain bearing" surfaces, such as crankhafts. This prevents metal-to-metal contact. These bearings need very little pressure to keep the metal pieces apart. Too little, like "0" on the gauge, will produce the dreaded metal-to-metal contact and damage in a very short time.
That's why cars have an oil pressure warning device, either a gauge or a light that comes on when the pressure gets too low.
Oil pressure also pushes oil through the filter and then it circulates through the engine, picking up heat on contact from the internal parts. [Some diesels engines spray oil under the pistons to add to the cooling effect.] So, oil also COOLS the engine. Newer BMW motorycles look air cooled but are mostly cooled internally by oil flow and oil coolers.
Oil LEVEL measures oil VOLUME. Too little oil means there is a smaller volume to remove the same amount of heat, which means hotter oil temperatures and quicker oil breakdown, which means even less oil, and so on in a "death spiral." Severely overheated oil gets very thick and sludgy, and sludge doesn't pump well or make good hydraulic bearings (see above.)
This oil breakdown takes time, which is why [most]cars don't have an oil level warning device, but a manual dipstick. It's also why the oil is changed at time/distance intervals.
Add too much oil and it goes squirting in places you'd rather it didn't.
'Way-way-way too much' and you could put the engine into hydraulic lock, I guess...
Oil level just needs to be between MIN and MAX. Don't panic! Check it at reasonable intervals and add a quart when it will fit. That's why the Min and MAX marks are about a quart [litre?] apart
'96 E300D 60k mi (wife's daily ride)
'95 Audi 90 120k mi
'92 GMC Suburban 139k mi
'85 300SD 234k mi (my daily ride)