Small Aircraft Instructor Pilot reported while holding short of the runway; another aircraft was lined up incorrectly to land and overflew their aircraft.

Narrative

Upon requesting taxi clearance for a local training flight; we were given instructions for Runway 30L via H-B-K; with the run-up area for 30L just off of the intersection of taxiways B and K. Upon entering the run-up area; we began our checks. At this time; we had our taxi light and position lights on; with the strobes off due to other aircraft being in the direct vicinity of us within the run-up area. The other aircraft within the run-up area also had position lights on without strobes. While completing our checks; I heard Tower give landing clearance to a Aircraft X for 30L; as well as an Aircraft Y to follow second. During this time the Tower queried the Aircraft Y to confirm they were lining up with 30L. The pilot of the Aircraft Y confirmed. After our run-up was complete we began to taxi to hold short 30L at K. At this time; I watched the Aircraft X land and roll down the runway with no issues as we began to move. We advised Tower of our position and were given instructions to standby for landing traffic. I looked off to the right side of the aircraft to find and identify the landing traffic (Aircraft Y). I noticed the Aircraft Y being closer to our side of the runway than typical for that of landing traffic and made a remark about it to the other pilot onboard. Within seconds the landing light on the Aircraft Y appeared larger and larger; giving the indication the path of the aircraft was not adjusting. The Aircraft Y was headed directly for taxiway B; which runs parallel to 30L; and is where we were holding on K short of the runway. It appeared the Aircraft Y would collide with our aircraft; before the Aircraft Y passed directly overhead. I watched the Aircraft Y pass directly above our aircraft; before veering right to realign with 30L and land. I advised ATC the aircraft passed directly overhead very low yet landed on 30L. After some communication between Tower and the Aircraft Y pilot confirming they did in fact land on 30L; yet may have lined up incorrectly; we were given take-off clearance. After the student taxied onto the runway; I decided to reject the take-off clearance and taxi off to the run-up area again to contact our company over the event that just occurred. While talking to our company; another aircraft inbound for the airport had asked Tower to brighten the field lighting. Approximately 5-6 minutes later we elected to continue our training flight and were given another take-off clearance. Shortly after rotation; Tower queried us to confirm our lights were on. As I verified all lights were on; I found the strobes off from when we sat in the run-up area the second time. I turned all on; and we continued the flight with no issues. After looking at the flight tracks for aircraft into the airport that evening; it appears the Aircraft Y was on a left downwind for 30L; overshot the final for 30L towards 30R; before over correcting and lining up for taxiway B which is to the left of 30L. I believe this is what prompted the Controller to initially ask and confirm the Aircraft Y was lining up for the correct runway. After consideration; we should have immediately called Tower to alert the Controller of what we were seeing regarding the incoming aircraft being lined up for our taxiway; as the Controller had questioned the pilot of the same concern minutes prior. However; the time between confirming the aircraft's path was in fact toward us; and being able to reach out to Tower; would have been a few seconds at most. Another improvement could be to have the airfield lighting a bit brighter; as this could have aided the Aircraft Y in lining up correctly; as well as assisted the other pilot inbound who asked for them to be brighter.