A lot of the world's leading airlines do this, BA being one of the worst/best at it. They play on the law of averages in regards to no-shows and overbook accordingly to maximise revenues.
Passengers affected can get quite a sweet deal if taken off of the flight/volunteer.
I'm not sure how it works with LCCs or regional airlines though...
Oh I'm well aware of the common practice of over selling a flight, however I didn't think that regional/commuter carriers did it.
When you've only got 40 seats to play with the law of averages doesn't work as well in your favour as when you've got 400+. Also the flights are more time critical for the passenger than medium/long haul, where the difference of a few hours might not matter.
In any case the reason these pax couldn't board was because the aircraft had been changed for one with fewer seats, at least that's what the check-in staff said.