Too Clever By Half

It seems that I've noticed people using this phrase more often lately but I've never quite known what it meant.  I'd always interpreted it to mean that an argument or position is needlessly complex and that faults lie in the details.  Like a Rube Goldberg contraption that almost worked.  

The Cambridge Dictionary of Idioms suggests a very different meaning: that to be too clever by half is "to be too confident of your own intelligence in a way that annoys other people."  But other sources propose different meanings.

This message board of etymology geeks suggests that the idiom means "too smart for one's own good," or that someone has "outsmarted himself" --- both of which are compatible with my previous understanding.  A different site suggests that "by half" suggests simply, "by a long way."

I suspect that the negative connotation conveyed by this old saying has something to do with a negative meaning of the word "clever": "Superficially skillful, witty, or original in character or construction."  If cleverness is only superficial, it's easy to understand why too much of it is a bad thing.  But the specific prejudice against (1.5) x (cleverness) is a mystery to me unless we embrace the "by a long way" meaning for "by half."

These are the kinds of things I think about at 12:30 am while I'm trying to avoid thinking about trying to sell my house.