It could be that a phaser overload doesn't use the particle generator but instead causes the power cell to overload, or that the destructive nature of Nadion particles requires a certain concentration to cause significant damage, something that an explosion doesn't tend to do well, compared to a directed shot.
If it were the power cell exploding, it should release all of its energy. But the explosions are too small for that to be the case. A stick of TNT has roughly 3 MJ of energy, if the phase puts out 1 MJ per second, and releases 1 MJ as an explosion it should cause a decent explosion as well. In fact, that fits what I vaguely remember of the effects of phaser explosions, or maybe the stated effects. I can't remember which.
Keep in mind, the effectiveness of an explosion is in the energy being released extremely rapidly, upping the power (wattage) tremendously for a relatively small amount of power (joules). The prefire chamber is probably the key, but it wouldn't make things weak just because it's releasing energy explosively.
Actually, if we take the time the overload sound takes, and assume they're using only a kill setting, then that would give us an idea of what the energy level is. Maybe 8 seconds? That would be a couple sticks of dynamite and would actually fit better.
That ends requiring an explanation for how the phaser handles more powerful settings. I think that can be handled simply by having it that the different energy states of the beam take more power, becoming less efficient to make as you go up in setting. However, the actually amount of energy being outputted isn't much different despite changing effectiveness due to magic phaser abilities.
"Phaser overload is caused by a rebounding of energy from the storage cell to the pre fire chamber and simultaneously back to the strorage cell. While the total energy within the system remains the same, the flow pressure is elevated during the rebound, to the point where the strorage cell cannot reabsorb the energy fast enough. Explosive destruction of the phaser will occure when the energy level exceeds the prefire chambers density and structural limits."
Star Trek TNG:TM
I don't trust the TM's to give good explanations. If we can come up with one that happens to fit, then great, but if it doesn't fit it it's no problem. Besides, that explanation is overly complex. It would be sufficient to say the prefire chamber is overloaded and nothing more, rather than the pointless back and forth.