Overall quantity limit: In this limit, you can set the limit for the shop level which means you can set the limit for overall inventory of the product.
After that pre-order button will change into a sold-out button, (You can change the text of this Sold Out button) from the same section.
Order wise quantity limit:- In this limit, you can set the limit on the order level which means this limits the number of products in one pre-order.
After that pre-order button will change into a sold-out button for that customer only.
If you need more clarification, we are always here for you.