During our world-building Q&A, Diana asked How much world building/back story/detail is too much? Can there be too much given the understanding not everything will make it into the book? Does having that detail and understanding of your world help a writer create the book even though the 'support beams' of the structure are invisible to the reader?
There are a lot of opinions on how much world-building a writer should do, and most emphasize that as the author you can never build enough or know too much about your story's universe. I think you can, under certain conditions, and end up buried beneath a mountain of world-building so detailed it smothers the life out of the characters, the story, and your ability to communicate all this to the reader effectively.
I'm a very detailed world-builder, but I keep everything within boundaries dictated by the needs of the story. Here are the three things I think about when I'm world-building:
What do the characters need?: For any novel I write I always first consider what details are necessary for my cast to come to life and function. For my private investigator protagonist I had to build a business, home, clients, friends, enemies and puzzles for her to solve, so my world-building focuses a great deal on details pertaining to these things. I've drawn the floor plans for her business office and the building, written up profiles of other tenants in the building and what they do, and timelined a typical day at work for my P.I. As I did this, other details that needed defining emerged, such as working out the magic system in my world, creating a backstory between my protag and one of the other tenants, some of of the daily habits my lady P.I. has acquired as part of her work routine and so forth.
What does the plot need?: The plot of my first Disenchanted & Co. novel starts very small and incidental with a lady who believes she's been cursed. That incident, which in itself is not very significant or complicated, is actually the hub of the entire plot. I started with the situation that brings the lady to my investigator, and worked out from there with my world-building details. I had to know precisely what was happening to this lady, and why, who is involved, who they are, and how all of that and them are related to every other event and character in the book before I could write it. Not every writer wants to know in advance all these details because it spoils the fun of the writing for them, but to make it work I personally have to know.
What does the reader need? This is the trickiest part -- you have to give your reader enough detail to make your characters, your world and your story understandable but not so much that you bury the reader in a succession of massive infodumps and bring your story to a crashing halt every other page. This is when you have to choose the strongest, brightest and most interesting details of your world-building and deliver them to the reader in the natural course of the story. As writers we're always tempted to explain everything so no reader is confused or left behind, but it's better to develop a sense of trust in the reader and their intelligence and make wise choices accordingly versus thinking everyone who reads is an idiot who needs every single detail painstakingly spelled out for them.
I think any writer can world-build in too much detail, particularly if they're trying to avoid writing the story. My theory is (and it could be wrong) is that the more time and detail you devote to world-building, the less time you have to devote to actually writing the story. I've met writers who have a dozen notebooks filled with amazingly detailed maps and complicated governments and multi-culture social structures and hundreds of character outlines and complete bibles of magic systems -- the sort of planning that takes years, sometimes even decades to complete -- and yet have not written a single word of fiction based on any of it. If you ask them why, they'll tell you that they're not ready, they're still working out some things or a similar excuse. In a sense they've become fans of their own world-building and have forgotten or set aside the real reason we do it: to write a story.
Finally, when you build a world, you need to think about the person doing all the grunt work: you. You need to construct everything you need to know in order to write this story. You may do this all in advance, the way I do, or you may prefer to improvise your world-building along the way as you write the story. I don't think it matters when you build, as long as you are building effectively by creating details that serve your story, allowing you to write with confidence and deliver an engaging tale for your readers.