diff --git a/workspaces/arborist/lib/edge.js b/workspaces/arborist/lib/edge.js
index 242d2669ae4ca..f7e941bc56f4c 100644
--- a/workspaces/arborist/lib/edge.js
+++ b/workspaces/arborist/lib/edge.js
@@ -4,7 +4,6 @@
 const util = require('node:util')
 const npa = require('npm-package-arg')
 const depValid = require('./dep-valid.js')
-const OverrideSet = require('./override-set.js')
 
 class ArboristEdge {
   constructor (edge) {
@@ -275,12 +274,15 @@ class Edge {
         this.#error = 'PEER LOCAL'
       } else if (!this.satisfiedBy(this.#to)) {
         this.#error = 'INVALID'
-      } else if (this.overrides && this.#to.edgesOut.size && OverrideSet.doOverrideSetsConflict(this.overrides, this.#to.overrides)) {
-        // Any inconsistency between the edge's override set and the target's override set is potentially problematic.
-        // But we only say the edge is in error if the override sets are plainly conflicting.
-        // Note that if the target doesn't have any dependencies of their own, then this inconsistency is irrelevant.
-        this.#error = 'INVALID'
       } else {
+        // Note: We intentionally do NOT check for override conflicts here.
+        // Different override sets pointing to the same node are allowed as long as:
+        // 1. The node satisfies the version requirement (checked by satisfiedBy above)
+        // 2. Any actual version conflicts in the node's dependencies will be caught
+        //    during normal dependency resolution in the build/reify phase
+        // The previous check (from b9225e524) was overly conservative and produced
+        // false positives, especially with reference overrides ($syntax) that resolve
+        // to the same effective versions despite being structurally different.
         this.#error = 'OK'
       }
     }
diff --git a/workspaces/arborist/test/node.js b/workspaces/arborist/test/node.js
index 85212e53a4a39..a15b22f614ab5 100644
--- a/workspaces/arborist/test/node.js
+++ b/workspaces/arborist/test/node.js
@@ -3277,7 +3277,25 @@ t.test('should propagate the new override set to the target node', t => {
   t.end()
 })
 
-t.test('should find inconsistency between the edge\'s override set and the target\'s override set', t => {
+t.test('edges with different override contexts to same node should be valid', t => {
+  // Regression test for issue #8688
+  // Replaces the removed test 'should find inconsistency between the edge's override set
+  // and the target's override set' which was testing override conflict detection that
+  // was intentionally removed because it caused false positives.
+
+  // Create two different override sets (simulating Vaadin's structure)
+  const overridesComponents = new OverrideSet({
+    overrides: {
+      '@vaadin/react-components': '24.9.2',
+    },
+  })
+
+  const overridesComponentsPro = new OverrideSet({
+    overrides: {
+      '@vaadin/react-components-pro': '24.9.2',
+    },
+  })
+
   const tree = new Node({
     loadOverrides: true,
     path: '/root',
@@ -3307,18 +3325,28 @@ t.test('should find inconsistency between the edge\'s override set and the targe
     }],
   })
 
-  // Force edge.override to a conflicting object so that it will differ from
-  // the computed override coming from the parent's override set.
-  const conflictingOverride = new OverrideSet({
-    overrides: { mockDep: '1.x' },
-  })
   const edge = tree.edgesOut.get('mockDep')
-  edge.overrides = conflictingOverride
 
-  // Override satisfiedBy so it returns true, ensuring the conflict branch is reached
+  // Manually set an override to the edge
+  edge.overrides = overridesComponents
+
+  // Override satisfiedBy so it returns true, simulating that the node satisfies the version
   edge.satisfiedBy = () => true
 
-  t.equal(tree.edgesOut.get('mockDep').error, 'INVALID', 'Edge should be marked INVALID due to conflicting overrides')
+  // Before the fix (b9225e524), if we then changed the target node's override to a different
+  // set, the edge would be marked INVALID due to override conflict detection.
+  // After the fix, the edge should remain valid because:
+  // 1. satisfiedBy returns true (version is satisfied)
+  // 2. We no longer check for override conflicts at the edge level
+  const mockDep = tree.children.get('mockDep')
+  mockDep.overrides = overridesComponentsPro
+
+  // Force edge to recalculate
+  edge.reload(true)
+
+  // The edge should be valid despite different override contexts
+  t.equal(edge.error, null, 'Edge should be valid despite different override contexts')
+  t.ok(edge.valid, 'Edge.valid should be true')
 
   t.end()
 })