You don't count the overlap twice- imagine the top part wasn't there- the total length is the 12" for the back, plus 1/2" for the hem.
From the instructions
The width of the front is 12"
The width of the back is 7 1/2" from each side, with each side having 1/2" for the hem, so 8" for each side = 8" x2 =16"
16" + 12" = 28"
The amount of overlap is 3"
Diagrammatically-

Measurements across the back go

12" front

7 1/2" 1/2" total = 8"
->
1/2" 7 1/2" total = 8"
this point should start from the far right edge but this website is correcting it to be left justified, so you need to draw it starting from the right edge
3"
this should be in the centre

Hint: Mark in the 6" point and measure from each side, is 1 1/2" overlap in either direction from the centre

If your insert is very full the 3" overlap may not be enough.

Colleen, the overlap is on both ends from the center. It's not one end ending in the middle, and the other one overlapping it by 3" from the center.

In other words, imagine a line down the center -- each opening edge continues (or, should continue) 3-1/2" in each direction from that center line.

Exactly. Imagine a line down the centre. This line is six inches from the edges on either side. If you folded the fabric at 8" from each end as described in the instructions, then each side will go past that centre line by 2" (8" - 6"). So the overlap of the unhemmed edges is 4", or 2" in each direction from the centre line. But you have taken 1/2" off each edge in the hem, so the overlap is now 3" (4" - (1/2"x2)).
Draw it on a piece of paper- makes it easier to visualise.