The standard campaign world is neither over- nor under-powered.
And power is all relative anyway - if every bartender is a retired arch-mage, then the characters being high level and having a great deal of personal power won't necessarily get them very far.
If commoners all have one hit point and almost no one has a character class, then a group of second level fighters with sharp swords could be considered "overpowered" in that world.
So what do you mean by "overpowered?" Magic? Being able to accomplish things with skills and attacks with more than a miniscule chance of success?
What sort of challenges do you envision? How is the challenge different for a group of crappy-classed characters fighting kobolds as opposed to a group of well-classed 5th level characters fighting gnolls?
I do realize it takes greater creativity and skill on the part of the DM when you have to deal with characters who aren't all grovelling in the dirt, happy to have a +1 dart as their sole magic item as a 12th level adept, but then after a while, one has to ask what is the point of even having levels, then? I mean, if you REALLY want to do a low-power campaign, why not eliminate experience entirely - just have everyone be a zero level commoner with no money and no advancement and adventure that way? If low-power == good, then that ought to be the best campaign EVER!
But really, you just play what you find to be fun. If grovelling in the dirt while your world dominates the players is fun for all, go for it!