Both interpretations are correct, because they are actually the same.
Let's look at the maths to see why.
Java stores values in byte, short, char, int and long in a format called two's complement.
In case of byte, short, int and long it is signed, in case of char it is unsigned.
One of the attributes of the two's complement format is that for most operations it does not matter whether the value is interpreted as signed or unsigned as the resulting bit pattern would be the same.
To shorten things, I'll explain it using byte, but the other types work along the same scheme.
A byte has 8 bits. The topmost bit is interpreted as sign bit. So, the bit pattern goes like this:
snnn nnnn
The separation into two groups of 4 bits each is called Nibble and is performed here for pure readability. As a side note, a nibble can be represented by a hexadecimal digit.
So there are 8 bits in a byte, and each bits could be 0 or 1. This leaves us with 2^8 = 256 different values that could be stored in a byte.
Here are some sample values:
0000 0000 -> 0
0000 0001 -> 1
0000 0010 -> 2
0100 0000 -> 64
0111 1111 -> 127
1000 0000 -> -128
1111 1110 -> -2
1111 1111 -> -1
The 2's complement value of signed numbers which are negative, i.e. the sign bit is set, is created by taking the positive value of the 8 bits and subtracting the range, i.e. in case of a byte by subtracting 256.
Now let's see what happens if you take -1 and add 1.
1111 1111 -1 / 255
+ 0000 0001 1
--------------
= 1 0000 0000 -0 / 256 intermediate result
= 0000 0000 0 / 256 result after dropping excess leading bits
There is an overflow. The result would need 9 bits now, but the byte only has 8 bits, so the most significant bit is lost.
Let's look at another example, -1 plus -1.
1111 1111 -1 / 255
+ 1111 1111 -1 / 255
--------------
= 1 1111 1110 -2 / 510 intermediate result
= 1111 1110 -2 / 254 result after dropping excess leading bits
Or this, 127 plus 5.
0111 1111 127
+ 0000 0101 5
--------------
= 1000 0100 132 / -124
As we can see, the leading bits are dropped and this actually is what leads to the effect that causes it to overflow by "starting to count from the minimum value again".