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OK this is what I’ve never understood about this: Maybe I’m stupid, but isn’t any child born to a US citizen, even while overseas, is still born a US citizen?

Quite probably, depending upon the age of the mother. It helps if both parents are US citizens. However, that's not the issue here. The issue is Obama's Natural Born Citizen status. Is being the child of a couple, only one of whom is a US citizen, born outside the jurisdiction of the USA, a "natural born US Citizen?" Basic to the theory as applied in this case is that, while Obama might be a US citizen, he wouldn't be a "natural born" us citizen because he was born outside the USA and granted birth citizenship in the British Commonwealth in Kenya.

Even if it turns out that Obama is a "natural born" US citizen -- let us say he actually was born in Hawaii, within the USA -- it is very possible that he lost that citizenship when his mother and step-dad took him to Indonesia and his mother became a naturalized Indonesian Citizen and his step dad adopted him. In this case, he would have lost his citizenship and could only have reestablished that citizenship through making an oath of allegiance to the USA on his 18th birthday. But, even then, he would be a naturalized -- or statutory -- citizen and, hence, not qualified for office.