"Too much of a good thing is an awesome thing. But too much of an awesome thing is... umm... really, really dumb and bad." -- Strong Bad
Diminishing Returns is a concept regarding the resources you dedicate to a project. In theory, adding people will improve the speed and efficiency of the project according to the number of people involved (1+1=2). But it rarely works that way, as assisting a project doesn't necessarily double the speed (1+2=2.5) and at some point you start to hurt the efficiency because the project can only move at a certain speed and adding resources is wasting resources (1+3=2.5).
As a trope, it may seem that adding characters or plot elements to a story, features to a video game or increasing the action quotient could only improve the project, right? The truth is there is such as thing as "Too Much Awesome" and because there is so much going on you aren't able to develop those elements in the same level of quality as when it was smaller in scale (characters aren't given a chance to develop, the plot isn't explained at all and the action is perfunctory).
This can be seen the most when it comes to Villain Team-Up
stories because the premise is so juicy "Our two favorite villains are going after the heroes at the same time!" but it often ends up that it hurts their threat level when they have added
firepower and were still defeated.
Often commented upon by people within the project after the fact. To be expected, your mileage may vary.
- Mass Effect 2 added a great deal more characters to choose from for your personal team compared to Mass Effect (Six for 1, ten for 2 or twelve with DLC). In the first game the characters were added to your team as you progressed through the main story, making it a natural progression of the story. Because of the number of characters the second game largely involves actively recruiting these characters (and doing their "loyalty mission") as the primary story instead of acquiring them along the way. The developers admitted it was a bit overkill and backed off for Mass Effect 3.
- The producers of Batman: The Animated Series pointed this out when it came to a couple of episodes, specifically "The Strange Secret of Bruce Wayne" (which portrayed Joker, Two-Face and Penguin in a more ineffectual and comical manner than when they were acting alone) and "The Trial" (where nearly every villain appears but few have any lines).