The blue pencil doctrine is what lets a court cut the unenforceable parts out of an overreaching restraint and enforce what is left, rather than throwing the whole clause out.
Technically, it is the common law principle allowing courts to sever grammatically severable, unreasonable parts of a restraint of trade clause while enforcing the remainder, provided severance does not require rewriting the clause or changing its meaning. In New South Wales, the Restraints of Trade Act 1976 goes further, letting the court read down or modify an unenforceable restraint to make it reasonable, a power unique to that state.
This doctrine is exactly why buyers draft restraints as broadly as they can defend, and often broader: even if the widest version is struck down, the court can sever back to something narrower and still enforceable, rather than the whole restraint failing. The doctrine works in the buyer’s favour by default.
You should not rely on a court eventually narrowing an unreasonable restraint down to something fair. Outside NSW, courts can only cut grammatically separable words, not rewrite unreasonable substance, so an overreaching restraint may simply fail entirely rather than be repaired, leaving you to litigate the point rather than having it fixed for you.
What you as a seller should push back on: relying on the blue pencil doctrine as a substitute for negotiating a reasonable restraint upfront, and any drafting that deliberately stacks broad, overlapping formulations on the assumption that severance will sort it out later.