On this page of the Baldurs Gate 3 guide, you will find information about the party members' capacity limit. You'll also find out the effect it has on the gameplay.
There are two things you have to watch out for when equiping items. The first is, of course, the number of backpack slots available. If you fill it in full, the character will no longer be able to pick up any more items.
The second thing is the carry capacity of the chosen hero. You can find it under the list of items that a character has. If the character takes too many items and their weight exceeds the carrying capacity, his movement speed will be limited. This will be especially visible in combat. The unencumbered figure will be able to travel a greater distance before his action points are spent.
Of course, every member of your team has his own backpack, so you always have the option of moving items from a backpack to a backpack. Moving an object is simple - all you have to do is click on it and move it to another window. You have to monitor carry capacity on your own, as the game won't inform you that the character is overcumbered.
Warning: an error may appear in the game that will change your team's capacity limit.
Remember that weapons and armor are the heaviest items. Meaning try to avoid carrying too much of them, as they may overload your character quickly. Especially a hero that you most often control.