How does a body react to losing 2-3 kg overnight?

Most immediate weight loss is due to water loss, not fat loss. Rapid reductions in weight often come from dehydration, which can be dangerous. 

Rapid water loss can cause an imbalance in electrolytes, such as sodium and potassium, which are crucial for proper cell function which leads to dizziness, muscle cramps.

Rapid weight loss often involves depleting glycogen stored in the body which also leads to water loss because glycogen binds with water in the body.

Extremely rapid weight loss can slow down the metabolism as the body goes into "starvation mode," trying to conserve energy. 

Rapid weight loss can lead to muscle loss as the body may break down muscle tissue for energy if weight loss is achieved through calorie restriction or dehydration.