Just today, I had someone ask me my opinion of short stories vs. novel-length. When is it too short? When have you gone too far? How do you find the right balance for a particular work?
Short or long, my mantra is: "A story is as long as it should be to tell what needs told...always." If that can be accomplished in an economy of 800 words, it can. It it takes 214,000, it does.
Now, the caveats...
1) You can almost always cut WORDS from a story without cutting plot and characterization. By that, I mean you can nearly always find meaningless words that are bogging down the reader and can be deleted without affecting the greater work.
2) By comparison, with the right POV, there is almost always a little more characterization or plot or explanation you can add without adding meaningless, padding words. Not always. Sometimes, you've really done it justice, but I find in edits that a good editor will show me where something could be clearer with just ten more words of my choosing.
3) The novel is the journey, the battle/struggle, the war sometimes, the evolution or revolution of the world and characters. The novella is the shorter battle, the change occuring...starting here and ending there, often with a brave new world to tackle in the sunset. The novellette or short story is the moment of change or discovery or what-have-you.
4) The shorter you go, the more focused you must be. But that doesn't mean you have to skimp on backstory and characterization. I once wrote a fully-fleshed short story in 3500 words that had two main POV characters that had known each other for 40 or more years of pertinent backstory moments. However, the shorter the story is, the faster you have to get in, get the punch to the reader, and get out of Dodge. You can do that with an economy of well-chosen words. I once had an editor tell me that she'd read 70K novels that had less going on than the 18K novelette she'd read of mine, but the novelette was fast-paced and depended on that packed telling.
5) Length may mean a story or book is not the right fit for a particular market. There is never only one right market for a book. Even if it's for a licensed world, there is something in that book you can salvage and use in your own world.
6) Not every character has a novel to tell. Sometimes all there is to a character are a few truly remarkable moments in a life that is otherwise unremarkable or that would be gross repition of abuses or neglect to repeat. A hint or smattering is enough to set the stage.
7) When is it too little? When the majority of your readers are saying you skipped X and Y and maybe even Z...when they SEE the places you could have expanded, en masse. When is it too much? When the majority of your readers say you bored them by pacing the book too slowly...or when they say there were so many characters they couldn't keep them straight (which may also mean the characters didn't have distinct voices and personalities). I state it this way because no book is universally loved or hated, and there will always be one person that doesn't like what you've done. It's all based on opinions, and you have to weigh those, as the author.