I'll try put in all in baby words...

why does installing more applications 'slow' down a phone?

It can't be helped it's simply logic. Every action has a consequence.

The more apps you install, the device looses more memory/cpu power. By logic the less memory/cpu power your device has, the more it's performance would decrease. It's inevitable.

When it comes to clocking. More volts = more energy. Everything requires energy to move. The more energy you have available, the more it increases the chance of the device being able to move effeciently.

However everything can only hold energy up to a certain point. You have to much energy and you begin to malfunction. If you overclock the device too much and you would damage/destroy it.

In the end it all comes down to logic.