To paraphrase Mark Sisson, you should be "strong enough to save your own life." This is from the following post Could You Save Your Own Life: "the abilities to maneuver your body with precision, manipulate/lift/push/pull your own bodyweight without tiring too quickly, jump high and far enough to clear a few feet, swim for a few hundred meters, and maintain top running speed for a couple hundred meters are crucial for survival."
Beyond being able to survive a reasonable fight or flight scenario, I think it's an individual preference/need.
One indication that you've got too much muscle is when you start to have difficulty feeding yourself. Another might be when moving around is impeded by muscle mass. You see both scenarios in body builders with hypertrophied arms and legs.
That having been said, the pursuit of "as much LBM as possible"--with blinders on--is not a good thing. On the exercise side, doing so will predispose one to overuse and other injuries. And, of course, the drug regimen required to truly maximize ones LBM is absolutely insane. So... the answer involves a few caveats thrown in.