I have an e-mail returned by the Daemon with the reason given as "over quota" what does this mean?

Well, most ISPs and web based email providers have rules in place: some have maximum file sizes for attachments, most have maximums for number of recipients/how many emails per day. I had one who had a bandwidth maximum and would not deliver an email until tomorrow if I was over for that day.

So, check the terms of your email provider.

Do you use iCloud email? If so, here are the maximums for that one:

https://support.apple.com/en-us/HT202305

Here are Centurylink's (which happens to be my current ISP):

http://internethelp.centurylink.com/internethelp/email-server-limits.html

As for anyone else, you need to check with them - they all publish those in their terms.

Maybe the recipient was over quota. Look at the email header to see where the email was returned from.