Yes, but the losses in Figure 3 increase because the larger models see fewer data to keep the FLOP budget constant, not because of overfitting. Large models do

Yes, but the losses in Figure 3 increase because the larger models see fewer data to keep the FLOP budget constant, not because of overfitting. Large models do not overfit very much, so the loss of a larger model will still be better compared to a smaller model when you keep dataset size constant.