Acadian, exactly. You will always get xp for completing quests, but the xp you get for killing lower level foes will drop by certain percentages as you out-level them.
For example if Buffy helps close the dolman that's right outside Vulkhel Guard while she's at level 39, she will not get a loot chest or xp for killing the level 7ish daedra there but she will get xp for closing the dolmen. Also the lower-level daedra she kills will still count toward various achievements, even though she did not get xp for killing them.
The bad thing about being slightly over-leveled is the loot you get is a bit low for you. Not a problem if you are crafting your own gear.
This will all change with the next update. That's why I'm so excited for it. Jerric will be able to go back through the whole world and fight things again. No more "wasted" areas where everything dies in one hit and treasure is useless to you.
Congrats on Buffy's growth! I think the high-stamina/high-damage approach is as close to a glass cannon as you can get and still survive walking around in ESO-world.