Java 8 method references and overridden methods

A Set is a Collection. Collection has a stream() method, so Set has that same method too, as do all Set implementations (eg HashSet, TreeSet, etc).

Identifying the method as belonging to any particular supertype makes no difference, as it will always resolve to the actual method declared by the implementation of the object at runtime.

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See the Liskov Substitution Principle:

if S is a subtype of T, then objects of type T may be replaced with objects of type S without altering any of the desirable properties of that program

Even method references have to respect to OOP principle of method overriding. Otherwise, code like

public static List<String> stringify(List<?> o) {
    return o.stream().map(Object::toString).collect(Collectors.toList());
}

would not work as expected.

As to which class name to use for the method reference: I prefer to use the most general class or interface that declares the method.

The reason is this: you write your method to process a collection of Set. Later on you see that your method might also be useful for a collection of Collection, so you change your method signature accordingly. Now if your code within the method always references Set method, you will have to adjust these method references too:

From

public static <T> void test(Collection<Set<T>> data) {
    data.stream().flatMap(Set::stream).forEach(e -> System.out.println(e));
}

to

public static <T> void test(Collection<Collection<T>> data) {
    data.stream().flatMap(Collection::stream).forEach(e -> System.out.println(e));
}

you need to change the method body too, whereas if you had written your method as

public static <T> void test(Collection<Set<T>> data) {
    data.stream().flatMap(Collection::stream).forEach(e -> System.out.println(e));
}

you will not have to change the method body.