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When a battery reaches full charge, it can no longer store incoming energy. If energy continues to be applied at the full rate, the battery voltage gets too high. Water separates into hydrogen and oxygen and bubbles out rapidly. (It looks like it's boiling so we sometimes call it that, although it's not actually hot.) There is excessive loss of water, and a chance that the gasses can ignite and cause a small explosion. The battery will also degrade rapidly and may possibly overheat. Excessive voltage can also stress your loads (lights, appliances, etc.) or cause your inverter to shut off.
Preventing overcharge is simply a matter of reducing the flow of energy to the battery when the battery reaches a specific voltage. When the voltage drops due to lower sun intensity or an increase in electrical usage, the controller again allows the maximum possible charge. This is called "voltage regulating." It is the most essential function of all charge controllers. The controller "looks at" the voltage, and regulates the battery charging in response.
Some controllers regulate the flow of energy to the battery by switching the current fully on or fully off. This is called "on/off control." Others reduce the current gradually. This is called "pulse width modulation" (PWM). Both methods work well when set properly for your type of battery.
A PWM controller holds the voltage more constant. If it has two-stage regulation, it will first hold the voltage to a safe maximum for the battery to reach full charge. Then, it will drop the voltage lower, to sustain a "finish" or "trickle" charge. Two-stage regulating is important for a system that may experience many days or weeks of excess energy (or little use of energy). It maintains a full charge but minimizes water loss and stress.
The voltages at which the controller changes the charge rate are called set points. When determining the ideal set points, there is some compromise between charging quickly before the sun goes down, and mildly overcharging the battery. The determination of set points depends on the anticipated patterns of usage, the type of battery, and to some extent, the experience and philosophy of the system designer or operator. Some controllers have adjustable set points, while others do not.