Yes, it is possible to have good physical fitness and still have too much body fat. But before we more fully answer the question, we want to say that it is best to be fit and to have a healthy level of body fat. As you learned earlier, there are many kinds of health-related physical fitness: body composition (also known as body fatness), cardiorespiratory fitness, flexibility, muscular endurance, and strength. All parts of fitness relate to each other, but each is also somewhat separate from all others.
So you can have good cardiorespiratory endurance and still have more body fat than you should have. Extra body fat will make it more difficult to score well on running tests of cardiorespiratory endurance because you have to carry more body weight during tests. You can be flexible and have a body fat level above the healthy fitness zone, but excess body fat can restrict range of motion in some joints. You can also be high in body fat and have good muscle fitness. Many sumo wrestlers are very overweight but can also be quite strong. Unfortunately, you can be quite strong (meaning you can lift a heavy weight) but have a hard time lifting your own body weight if you have excessive body fat.