how to monitor it:

go to the emprie tab (F1) and look at the number on the lower left side

how to deal with it:

1) there are techs and government choices that add a number of planets before overcolonizations kicks in

2) there are laws that grant happiness, some have dependencies e.g. happiness per empire at war

3) there are buildings and luxuary resources (most notably transvine) that grant happiness

4) some populations grant happiness

5) terraforming grants happiness (planets range from -20 happiness to +10 happiness )

6) there is a religious law that forces all systems to content (equivalent to 50 happiness)

7) don't settle every system. stick to systems with strategic/luxuary resources

some advice:

a) if you want a very large sprawling empire i heavily suggest to play united empire or a custom empire that reduce the over colonization penalty.

b) if you don't go for the religious law i suggest to put transvine in at least two system development modernizations for 50 happiness

c) terrafrom all planets asap to gain happiness, especially system with lots of toxic, barren, lava etc. planets

the cheapest way is the religious law that basically negates all happiness, however you need to make sure to keep the religious party in the senate. the easiest way is to reform your government into a dictatorship (or play cravers they start with it, however cravers can't change out of dictatorships).

personal opinion:

-this penalty should be hardcapped or face diminishing returns

-currently the religious law feels like a cheat code (especially for cravers) if you go for a very wide empire and/or play on large maps

-alternativly this penalty could diminish over time, i.e. your government slowly adapts to govern a large empire