It's a reference to Don Quixote.
I wouldn't call anything about racism an overreaction. There's the part about seeing racism where there isn't any and actually harming the fight against racism by adding windmills to fight and by destroying the weapon that would allow us to fight racism: debate. And there's the part about people reacting to this. It's not an overreaction to say censorship is bad and even harms the purpose; in fact, it's a necessary reaction. The issue lies in the use of this reaction by people who don't want equality for all humans, or who want it through strange means that cannot work, like "let the free market deal with everything".
The reason of the existence of society is to create a better life (better survival and better happiness) for everyone. If it weren't, humans would have remained solitary or would have lived in small groups; society exists because the social contract is beneficial to humans. Starting from there, it's obvious we should care about fighting racism: it harms the objective of society, and therefore harms the objective of human beings (the objectives of society and of human beings are the same, as long as you keep the meaning of society defined above).
What you called "don't overreact" is in fact "don't pervert society", "work towards its goal". I'm not advocating for a middle ground between "caring" and "not caring", but rather for a radical approach to the betterment of mankind. Why? Because if human life has a goal inherent to itself, it certainly starts with making humans' lives better. And if it doesn't have a goal inherent to itself, then humans should enjoy enjoyment itself. In either scenario, this approach is the right one. Note that I am not pretending to know the precise path to salvation for all of mankind. I am simply pointing at the broad direction where that path should be, according to the information that is available to us, humans.