Is minor overheating a problem for my engines?

Some engines like the Mainsail tend to always overheat when at full throttle, so I just set the throttle a bit lower. But I was wondering what the effect of minor overheating is, and how far I can push the engine before seeing any effects.

Is overheating damage a binary result? So either the overheating bar is full and the engine explodes or the bar is not full an nothing happens? Or is there gradual damage?

Parts in KSP don't have hitpoints and there is no performance degradation from heat or impacts. It's binary.

Overheating part during lift mean you are going too fast for the layer of atmosphere you are in and friction is becoming to high: you are reaching the terminal velocity.

Engines do not explode unless the overheating bar is full, however being in overheat is a good sign that you are in fact over consuming fuel. If you are willing to optimise your resources, it is a good idea to slow a bit down by reducing the thrust.