Yes decorations displace water thus lowering your fish capacity. If you are talking about saltwater then it could be the same since more live rock= more filtration. The 1 inch per gallon is a guideline NOT a rule.
Normally, in the saltwater hobby, people stock their tanks to its limit.
Translation = fill it with fish to where all their filtration can keep up with the bioload.
If your tank cant keep up, ex: constant struggles with ammonia, nitrites, nitrates, THEN it is over stocked.
