Am I understanding this right. I'm allowed an unlimited number of ships in a system, provided that they are each below a certain size.

That can't be right, can it? Whats the other restriction? I play small anyhow (admittedly, not that small, 32 size usually), but still, there must be another shoe waiting to drop.

still must remain within the overmatching limit (presuming they're working again).

Not sure they are working.

But the other official limit is that your fleet cannot be more that 600 pts larger than the smallest fleet in the system.

In my experience the actual limit on what can and cannot enter a system appears to be that as long as you are jumping in 600 points or less you may enter, otherwise you may not.

It ought to be no more than 600 pts more than the largest enemy fleet in the system, but this does not appear to be the case.