A true oversized blazer should fit loosely around the shoulders and arms and drape down past the waistline.
The history of this trend goes back to the '60s when women wore men's jackets as part of their own personal style. This was especially true when they were trying to make a statement about how they felt about society or politics.

Styling Tips for an Oversized Blazer
Wear it over a dress or skirt.
Add a belt to cinch the waist and create definition.
Wear it with jeans, tights and boots for an edgy look.