Toe Clip Overlap is a common flaw on smaller frames, esp ones that use big wheels and long cranks.
TCO doesn't affect high speed use, but does impact on low speed manouvering.
If you have TCO, this is another thing you have to think about when picking your way through heavy city-centre traffic or crowded multi-use bike paths. Mostly people remember to avoid it, but sometimes, you get overloaded with input, you need to slow, steer, work around bollards, push-chairs, dogs, camber. Something gets dropped off your ToDo list, and that is often working the pedals to avoid TCO. If you add in clipless pedals, recovery from TCO becomes more difficult.
It is an avoidable flaw in non-racing bikes and there really is no excuse for designing a non-racebike with TCO.