Choosing universities or programs
My concern is that smarter students will overrun me in the top university


Well, the good news is that the smarter students will be concerned about you overrunning them.  It's called impostor syndrome, and virtually everyone at a top institution has it.  (And I don't just mean the students...)

Also: being around people who are (much) smarter than you is a good thing, because it means you will learn more.  (That's why you're hanging around a university, right?)  The other good news is that in grad school, you will no longer be competing against your peers.  The bad news is that you will now be competing against the entire academic community in your chosen area of study.  So, it's probably good to have some other smart students around to talk to.  Right?

My experience as a student at a Extremely Well-Ranked School is that other students are very supportive, and empathetic to the experience of getting through a tough program.  In short: don't worry.  It will be ok.


  should I choose the university that fits me better or the university which is more selective


Isn't this a tautology?  The university that fits you better will fit you better.

A less sarcastic reply is: there is nothing that matters more in grad school (or in life in general...) than your relationships with the people immediately around you, namely, your advisor and the other members of your research group / lab.  Even brilliant students who do not have a good working environment or a supportive advisor will flounder—I have seen it time and time and time again.  In contrast, students who are not exceptionally brilliant but have a good relationship with their advisor / group tend to do well, at least well enough to move on to a satisfying career after grad school.  Prestige, fame, money, and beauty are all higher-order terms.  Pick the place where you will be happy.