Why not demasiado instead of muy?
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My guess 
is it began as a politeness thing. Instead of say something “it’s too big” (e.g. your head or whatever) it’s less upsetting to say “it’s very big”; implying rather than saying what you think. Over time people just “knew” what you meant and accepted this secondary meaning as normal.
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It’s less common to use “muy” as “too”, but it is used. Both WordRef and Collins dictionaries also apply that meaning (too).
WordRef defines as a principal translation, with one of three translations:
muy (adv) 1. (mucho) very (adv)
…2. (demasiado) too (adv)
…3. (con participio) greatly, highly (adv)
Collins gives two examples 2. (2nd meaning) (=demasiado) too
Ya es muy tarde para cenar. (It’s too late to have dinner now.)
Es muy joven para salir contigo. (She’s too young to be going out with you.)
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you can use both. They have more less the same meaning here.
I think it’s just as used as demasiado for “too”
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