Tuthrick: You have to keep in mind that it's just your own individual perspective, even though there are others that might agree with you, don't be so eager to label a game as "the most overrated game of all time", because you forgot to add *in my opinion*, which is crucial here.
Yes, Baldur's Gate is not a perfect game, or game for everyone.
Yes, it is praised by many, myself included.
My theory regarding it's popularity back when it was released may be a bit wrong, because I can't speak for everyone that enjoys BG, but here's what I think:
Baldur's Gate is one of those games that basically can speak to a lot of gamers. You enjoy exploration? BG is for you. You like party-based/real time with pause combat? You'll like BG. The same goes for: written dialogues, AD&D 2nd ed. system, a lot of freedom, medieval fantasy setting, etc.
At that time, there weren't many games like this. There was Fallout, which in several areas outshines BG, but it was Baldur's Gate that gained bigger popularity, it may be due to BG being easier to pick up by a beginner.
Does BG still hold up nowadays as a great game? It surely depends on whom you'll ask this question. I guess you'll get quite mixed answers, including "the most overrated game of all time" and "the best of all time".
This is quite an interesting phenomenon, because games get 'old' relatively quick. You can get people that enjoy the same genre, younger by e.g. five years and they even haven't heard of the title that you regard as great and influencial. I've noticed that Skyrim gets bashed sometimes nowadays and I remember it being praised as a second coming of Jesus himself several years back. Right now Witcher 3 is probably the most popular cRPG, but we'll see how it'll change in the coming years.
Besides, because of BG, we got another great cRPG: Planescape: Torment.
So yeah, that's just my observation.
TL,DR: Baldur's Gate is a product of its times, as are many other titles.
I think with the assertions like "the most overrated game ever" the subjectiveness is implied. Btw, had the same impression about Skyrim, but it turned out this time I'm loving it with everyone else (at the time). I never liked Witcher III so much, but that's the topic for another subforum.