The error "Your local changes to the following files will be overwritten by merge" occurs when conflicting changes are detected in a Git repository. This conflict arises due to the version control mechanism that Git has, where multiple users or branches may have made changes to the same file, resulting in conflicts during a merge operation. To resolve this issue, there are three options: stashing local changes, committing local changes, and discarding local changes. Stashing allows temporary storage of local changes, while committing permanently stores them, and discarding completely removes them. It is essential to use these methods with caution, as they may result in losing unsaved work. Reviewing changes before proceeding with these options ensures that important modifications are not accidentally discarded.