Source | SIGAUS
What happens if my oil level is too low?
Well, it's not good. Most vehicles can run a quart low on oil for a short time with no serious ill effects, but remember that startup is the most critical time for any engine. It's imperative that motor oil make its way to the upper-end components (cam, cam bearings, lifters, valves, timing chain) within the first second or two after startup. If the volume of oil in the crankcase is too low, it's not going to be able to reach these crucial parts quickly.
What happens if my oil level is too high?
Also, not good. If there's too much motor oil in the crankcase, the oil pump and crankshaft tend to aerate it and whip it into a froth. It practically turns all the moving parts in the engine into one big oil pump, while the intake for the oil pump itself will be picking up a lot of air along with the oil. Remember that at highway speed, the crankshaft and other parts will be turning at about 20 times per second, causing a lot of agitation of the oil. Frothy, bubbly motor oil won't be able to lubricate bearings and cylinder walls well, and serious engine wear can result.
If you've still got doubts about how much motor oil your engine needs, just check your owner's manual and make sure that the oil level on the dipstick is between "add one qt" and "full," and you should be fine!