Incorrect error on legitimate type overlap

TypeScript Version: 4.1.0-dev-20201102

Search Terms:

This condition will always return 'false' since the types 'X' and 'Y' have no overlap.

Code

function fn<T>(t: T) {
    return t === '' // error
}

fn('') // but here we pass it

https://www.typescriptlang.org/play?jsx=0#code/GYVwdgxgLglg9mABMMAeAKgPgBRQFyLoCUiA3gFCJWIBOAplCDUlIgLweIDkXiA9H0R0aNODXIBfcuRTYeJAYgDuYgNYBnIA

Expected behavior:

It works when we extend unknown. While this works on simple generics, it becomes inconvenient when the type parameter is nested deeper in a type structure.

function fn<T extends unknown>(t: T) {
    return t === '' // works
}

fn('') // works

https://www.typescriptlang.org/play?jsx=0#code/GYVwdgxgLglg9mABMMAeAKogpgDylsAEwGdFwBrMOAdzAD4AKKALkXQEpEBvAKEX8QAnLFBCCkURAF4ZiAORzEAeiWJqcQeWI8Avjx4oGCzirUatQA

Actual behavior:

This condition will always return 'false' since the types 'T' and 'string' have no overlap.

Related issues
https://github.com/microsoft/TypeScript/issues/27910

Reproduce the generic comparison in the TypeScript compiler using the provided code and Playground links, then compare it with the T extends unknown example. Investigate the type-overlap diagnostic and related issue #27910; done means the legitimate comparison no longer reports that it will always return false while invalid comparisons remain diagnosed.