If the water level is too high there will be less steam produced.
A high level could produce more steam than a low one, as much more heat energy is stored in superheated water than in the vapor above it.
As the steam exits the boiler, more steam will be created by the flashing of water into vapor, removing the heat of vaporization from the water.
This lost heat must be replaced in order to maintain pressure, and if the heating element does not provide it, the water will cool, along with the steam pressure.
Extra water is helpful, as the rate of cooling will be inversely proportional to the amount of water present.