Let's look at what actually happens (in C (assuming you've got the appropriate datatype, as some have pointed out that C doesn't have a "byte" datatype; nonetheless, there are 8-bit datatypes which can be added)). If these bytes are declared on the stack, they exist in main memory; at some point, the bytes will get copied to the processor for operation (I'm skipping over several important steps, such as processsor cacheing...). Once in the processor, they will be stored in registers; the processor will execute an add operation upon those two registers to add the data together. Here's where the cause of confusion occurs. The CPU will perform the add operation in the native (or sometimes, specified) datatype. Let's say the native type of the CPU is a 32-bit word (and that that datatype is what is used for the add operation); that means these bytes will be stored in 32-bit words with the upper 24 bits unset; the add operation will indeed do the overflow in the target 32-bit word. But (and here's the important bit) when the data is copied back from the register to the stack, only the lowest 8 bits (the byte) will be copied back to the target variable's location on the stack. (Note that there's some complexity involved with byte packing and the stack here as well.)
So, here's the upshot; the add causes an overflow (depending on the specific processor instruction chosen); the data, however, is copied out of the processor into a datatype of the appropriate size, so the overflow is unseen (and harmless, assuming a properly written compiler).