This is true, but overcomplicating things for most people. You'd have to be a serious bodybuilder to get to the "obese" range of the BMI chart and have that be healthy. The density of muscle is higher than fat but not so much higher (1.06 g/L vs. .9 g/L) to be able to get you to obese levels without looking like a pro wrestler.
The lower half of the "overweight" range is more ambiguous, but statistically speaking the health risks for this range are much less as well (and some studies have determined people in that range to be on average healthier than those in the normal range, perhaps because it includes more physically active people with more muscle). But if your BMI is at a level associated with severe physical health risks (30+ and especially 35+), it's unlikely that muscles are the explanation unless that's obvious.
To be "obese", maybe you need to be a serious bodybuilder, but being overweight is pretty easy.
My numbers: 6'5", 233lb, BMI 27.6 (solidly overweight), squat 180, bench 160, press 120, snatch 90. All numbers are 5 rep work sets except snatch, which is 3 rep work set. ORM might be higher.
The problem is that BMI was designed for sedentary people. It's a good guideline, but it's no substitute for a pinch test.
I am 6'2 and 235lbs, 16% body fat. According to The American Council on Exercise I am in the "fitness" category (Between athlete and average). However, according to the BMI, I am obese (BMI over 30). In order to have a BMI of less than 25 I would need to have a negative body fat percentage.
The lower half of the "overweight" range is more ambiguous, but statistically speaking the health risks for this range are much less as well (and some studies have determined people in that range to be on average healthier than those in the normal range, perhaps because it includes more physically active people with more muscle). But if your BMI is at a level associated with severe physical health risks (30+ and especially 35+), it's unlikely that muscles are the explanation unless that's obvious.