You may think it odd that I, the champion of quality, will admit that quality can be overdone. Well, first, this means you haven't read my book about the principles of quality. But second, what do you think, I'm unrealistic?
Maximum quality can be defined as that level of quality which best fulfils a purpose. Some things have no maximum, and can keep on getting better for as long as you work at them. Most things, however, do have a maximum level of quality. It's often higher than is reached. Sometimes, though, it is reached and passed.
Achieving a quality product often takes longer than achieving a mediocre product. It may involve double checking measurements, or taking the time to align things perfectly, or proofreading several times instead of once. The problem is, time is valuable too. You always have other things to do as well. So there is always a trade-off between time and quality. If you can get two mediocre products out in the same time as one quality product, what do you do?
First and foremost, you continue on the product at least until it fulfils its purpose, at least minimally. Then, make it better. The benefits are many: you enhance your reputation, you feel more pride in the product, you can charge more for it, you learn how to make it better more easily next time, and more. All it takes is a bit more time.
Rarely, very rarely, the time is just not there. But watch out not to fall back on this as an excuse. You always find the time to do at least some of the things you like to do. Well, make this one of the things you like to do!
But how far do you go? Very simply, until you are no longer making it better, or the difference is not noticeable. You can sand that birdhouse roughly, so it has no splinters. Then you can sand it so it is smooth all over, with no rough spots. Then, and this is too much, you can keep on sanding it until it is satiny smooth. This is too much. This goes beyond the purpose. After all, you are going to paint it, so it will look the same whether it is satiny smooth or just smooth. Then you are going to hang it outside, where weather will do what weather does to a birdhouse, whether you have sanded it just enough or too much.
Too much quality is when it doesn't make a difference. Too much quality is when another product suffers needlessly. Too much quality is continuing after you are done.
Read the book. It explains all this much better, in greater depth.