I was taught that once the plant puts out roots and they touch the edge of the pot it then starts developing smaller hair roots along the first ones. In other words the side of the pot will act as a stop on roots and force the plant to make smaller roots to take up water and nourishment from the soil. It means the plant develops a better root ball to support the plant. I hope this makes sense.

In Gardens Illustrated and Gardener's World latest show this issue was discussed. Apparently, when you overpot, the huge mass of soil where the roots haven't reached form a sump when the plant is continually watered. This sump then lacks air so when the roots eventually reach this area of soil there is little air and the roots become waterlogged. So , it is advised to gradually increase the pot sizes when potting on.

That bog also forms a haven for harmful water molds, and may produce noxious gasses, such as methane and hydrogen sulfide, which harm roots.