I probably would have stayed seated if I wasn't CCW. No real means to fight back if he's packing. OTOH I might have stood up and gotten into a defensive pose anyway - if he has a knife at least you can run at that point.
If I was alone I would definitely just back away inside. I didn't want to leave my friend though.
I don't think there was any "overreaction" per se. Especially if you would have stood up and confronted the guy whether you were carrying or not.
That said, I think it's useful to consider whether your willingness to confront the guy stemmed from your being armed. If backing away inside was the prudent course of action while unarmed, then it likely could have been the prudent course of action even while armed (assuming away the oblivious friend complication in this specific case).
A more black and white example of the point that I'm trying to raise is whether my having a handgun would lead me to arrive home and attempt to "clear" my apparently burglarized house, rather than dial 911 and have the police do it as I certainly would do if unarmed. I don't want want the presence of a gun to lead me to wantonly and voluntarily engage in more risky behavior than I would without one. That would sort of negate the risk-management benefits of being armed.
Being outside, as opposed to around home, is a much more fluid situation of course. I'm among those that say you probably ought to listen to your intuition.
Moreover, the "bladed" profile that people so often refer to is really not much different than the stance that a boxer, martial artist or other skilled, but unarmed combatant might assume. Unless you're clearly grabbing for a gun, I think the average street wack just starts thinking there are probably softer targets. You know you have a gun, but as long you don't brandish, then no harm or foul I reckon.
I once was once walking back to my car in a dark, dodgy part of town. I was in a rush, so I was gaining on the only other pedestrian in sight. A lone female. She crossed at the light; I immediately jaywalked across the street--because that's where I was parked. She immediately picked up the pace and disappeared.
Her threat assessment was wrong, but understandable in retrospect. If she had challenged me, I would have had a truthful and provable answer. (If she had turned and open fired, hmm...) Point being I don't begrudge her behavior and I don't think the dude who approached you would either if his intentions were actually innocent.