Why is my Mac showing more disk space used than available?

I'm having a difficult time figuring out whether I have a serious shortage of space on the internal SSD on my M1 Max Mac Studio.

macOS Sequoia Version 15.2 (24C101)

Storage pane in System Settings says 406.81 GB of 494.38 GB used

The bar graph below that shows distribution between Applications, Mail, Podcasts, Documents, iCloud Drive, Developer initially displays segments, but once calculations are complete, the whole bar graph is filled with red for Applications.

The bubble for the Applications segment claims they are using 640.72 GB. This seems impossible given the SSD capacity of 494.38.

How does this make sense?

[Re-Titled by Moderator]