I had to replace a toilet tank once. I tightened one side down and started on the other when >chink< it broke in two. Back to Home Depot and this time a worker helped me pull the tank off the shelf. “You do know to tighten the two bolts evenly, right?”
The specific answer to the OP’s question is that you know you’ve overtightened when you encounter the consequent problems: failure of the fasteners or the things they are fastening.
The more general point is that everyone who hopes to use nuts, bolts, etc. effectively needs to develop a “mechanic’s sense” about the nature of materials. Much of this will come from occasionally doing it wrong and suffering those failures. The time spent removing the remains of a broken bolt or a screw whose slot you mangled will (for most people) reduce the chance you’ll do it again.
“Do not overtighten” is shorthand for “Warning to the ham-fisted: failure is a definite possibility here. Best to proceed cautiously.”
You’re asking a very good question applied to 2 different items.
Think in terms of what you’re bolting together. If it’s the head to a diesel engine then you’ll be seriously torquing it down and there will be torque specs associated with it.
Toilets not so much. The toilet has a wax seal the needs to seat properly. That’s your goal. You don’t want it leaking and destroying the flooring. The weight of the toilet will do most of the work. You wiggle it a little as you set it down. The bolts are basically there to keep the toilet from sliding down the hallway. if it leaks after you’ve tightened it down they you have the wrong size wax seal. Where it gets interesting is a flange that is set at the wrong height.
tightening the faucet valves depends on what kind of fittings you have. The rule is to tighten until it stops leaking. If you’re face is turning red then you’re either really out of shape or you’re tightening it WAAAAY to much. If it’s leaking you can always tighten it some more.