The weird thing is that I traced out the circuitry and the bottom bit of the adder is discarded, not the top bit where overflow would happen. (Note that you won't get overflow for this addition because the partial remainder is in range, just split into the sum and carry parts.)
I believe this is because for any adder you always want 1 bit extra to detect overflow! This is why 9 bit adders are a common component in MCUs