The override directory contains custom content that changes resources of the game globally. However, it is still overridden by hak packs in single player mode. Hak packs are not currently loaded during character creation for multiplayer games, so the contents of the override folder control character creation for multiplayer games.
Some content in the override folder (besides visual and audio files) also apply to game clients if it is stored server-side while clients play on the server. Client overrides, however, will not generally affect or override the server, although they may cause conflict with files on the server.