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we need to set up a new permission level for external invited users in sharepoint online: They should overwrite existing files, but not create or upload any new content ( file and folder ).

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  • SharePoint mirrors the NTFS permission model. To do this in NTFS, it requires Delete and Create rights, because an overwrite is a combination of those actions. Thus, this isn't possible in SharePoint in a permission model -- you'd have to build another business process to do so, i.e. use another library where they can drop a document and Power Automate to match a file name in a destination library and copy over, if not, email the submitter that the file is invalid, etc.
    – Trevor Seward
    Aug 4, 2020 at 15:32

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Mostly is like Trevor said, overwrite needs Delete and create permission, as long as the external user can overwrite, he can create new file.

Here is more information about SharePoint permission level: https://docs.microsoft.com/en-us/sharepoint/sites/user-permissions-and-permission-levels

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