Reddit mentions of The Yellow Emperor's Classic of Medicine: A New Translation of the Neijing Suwen with Commentary

Maybe the first thing is to look into our own experience. What happens when we frequently sleep in late? Physically, we may feel well rested (though sometimes it works the other way); but isn't there also some kind of dullness or laziness on another level?

In this context, the word 'spirit' is referring to Shen, a term used in Taoist and other Chinese internal arts, including Traditional Chinese Medicine. Shen is one of the Three Treasures, three precious substances each person oversees, and which sustain our lives, activities, and spiritual attainments. (The other two Treasures are Jing/Essence and Qi/Energy.)

Preservation and nurturing of the Three Treasures is said to be necessary for development of both mundane qualities like mental acuity and spiritual qualities like subtle perception. (Actually, distinctions between mundane and spiritual are regarded as arbitrary.)

The guidance about sleep comes from a very wonderful classic text on health and how to harmonize with all the rhythms of life: The Yellow Emperor's Classic Of Internal Medicine (available in several translations).

Here, Shen or 'spirit' refers to our capacity for presence, and our moment-to-moment presence itself. When you meet a master or an advanced meditator and witness their shining eyes, that is the expression of Shen. When you are in love with someone and together you reflect almost magically bright eyes to each other, that is also Shen -- you are being very present with each other, very alive.

This is the faculty that can get harmed with oversleep (and I would say with other forms of indulgence and laziness as well). Less presence, less bright spirit, less care for the moment, less ability to ground and open to reality.

Anyway, that's the guidance. You should check for yourself whether that's true, and what further teachings may say about your own experience.

But just as an indicator of how traditional training harmonized with daily rhythms: the monks in most mountain temples in China and Korea wake around 3am! And in general their spirits are very bright, as a result of their meditative training, their ethical behavior, and their environment (clear mountain air, with fresh water, simple food, simple work), and as supported by the cycle of their day.