I wouldn't exactly say that it lowers aggression, but it spreads it out so it's not just one or two fish that are constantly being bullied. By overstocking you are creating more targets for aggression and are also prevention one fish from overwhelmingly dominating the tank. IME the more domininant fish sparring with each other gives the weaker fish a chance to hide and relax a bit. I have also never seen one fish be the dominant one of the tank for a long time, there's usually a slight power struggle between the top few which causes them to leave the rest of the stock alone(for the most part).