Roni Loren had a great post the other day about how to avoid killing yourself or your work over critiques. My favorite piece of advice was to edit until you love the story, not until you think it's perfect. You don't hear much about the dangers of overediting, and frankly I thought you were supposed to edit until the thought of opening the same Word doc one more time made you throw up in your mouth a little. It never occurred to me that editing could go the opposite way - that you could spend so much time with your piece that you actually start editing in the wrong direction, and damage your story.
Some edits are obvious - as soon as you read a scene a second time, or out loud, or your critique group comments on it, you have a "duh" moment. Of course the giant spider wouldn't be friends with Harry Potter; he'd want to eat him! Some non-edits are just as obvious - you can see how/why your beta reader suggested the change, but that's not what you want to happen. You respect their opinion, but you don't make the change. It's your right as a writer.
The harder edits to make are the ones you're not sure about. I run into these most with character decision-making and subsequent actions. I may think the character would react one way, but my beta readers may say something different. Ideally I know my character best, but they can be fickle creatures, our made up characters, and sometimes they're not good at revealing their motivations. Emotional reactions are not like math - there isn't always one correct response. I don't always react the same way to the same situation, so I don't expect my characters to be so consistent. When a critique partner comments on a character's reaction, I'm not always sure if I think they would behave that way or not. And if multiple readers give me the same feedback, I have to re-evaluate that character's behavior.
But the hardest parts to edit are the ones you've read so many times you're bored with them. I think this is where the danger of overediting comes in. Think of it like decorating a room - when you first decorated your room at 16 you probably LOVED it. Pink is awesome! Backstreet Boys will be cool forever! I love Teen Beat! (I was a sad, sad child). At the time you thought it was the greatest room ever. But after a few weeks/months/years in it, you started to get sick of it. Maybe Backstreet isn't so cool. Pink is so girly. They don't even make Teen Beat anymore. All of that awesomeness starts to look like crapness.
Here's the trouble - to a 16 year old, that room is awesome. But to an 18 year old, it's super lame. And to a first time reader, your scene is awesome. To you who have seen it so many times you hate every single word because you're so tired of them, it's awesomely bad. So you change it, because it's stale and overdone to you and where you used to think it was funny you now think it's stupid.
STOP. Don't touch that scene. Walk away, take a deep breath, date other manuscripts. Whatever you do, stop thinking about that manuscript. Because you're going to break it. You're going to break it and everything that comes after it, and suddenly a story that started about a sweet girl on a picnic is now about a werepanther at a rave (seriously, Charlaine Harris?). It's not your scene anymore, and you're not telling the story you wanted to tell. Now you're just dissecting a rotisserie chicken carcass because you can.
How do you know when you've hit this point? For me, it's when I start trying to edit scenes no one's read yet. Scenes that never used to bother me before, but because I've fixed all the big stuff I'm turning on the specifics. That's not to say you should rely on someone else's opinion as fact, but the odds are if you have enough people read it and they don't tell you it's broken and you never thought it was broken before, it ain't broke. Trust yourself and your storytelling, and trust that you don't need to change every single word or every single plot thread in revision because you must have written a crap first draft.
How do YOU know when you're overediting? What do you do when you realize that you are?