I have always understood critical avoidance to be the chance to convert an incoming critical hit into a normal hit.
The example I've heard in the past is that if the player has 200% critical strike chance (overcapped by a full 100% extra) and they attack, all of their hits will be critical hits. Then if the enemy they are attempting to hit has 10% critical strike avoidance, 10% of those critical hits will be converted to normal hits. This means that 200% critical strike chance hitting a 10% critical avoidance enemy will crit 90% of the time. This means that overcapping critical strike chance doesn't compensate for crit avoidance.
I haven't attempted to recreate this example to test it though.
I'm willing to be wrong about this though and if you've got another explanation on how it actually works, I'm happy to hear it.
Edit: overcapping crit chance does help compensate for being blinded though. That's an ailment that gives you the stat 50% less critical strike chance so you would need 200% crit chance to have 100% crit chance when blinded.