Overnight is a subtle way to refer to having casual sex. It hints at spending the night at a person's home, presumably to get to know them better sexually. Of course, one does not need to spend the whole night at a partner's place. They don't even need to do the deed during night time, at all. The term 'overnight' is just a safe way to talk about it. It's like "Netflix and chill” without unnecessarily getting a TV/movie addict partner excited for the wrong reasons.