Can there be too much prep? Absolutely. Too much info becomes a pain to navigate - you have to scan through your notes to find the stuff that's relevant.
If you invest too much time into some things, you find yourself "protecting" them, that is, either an event or thing becomes something you block the players from avoiding, working around, or affecting because it might destroy hours of prep time, rather than letting it be fuel for play.
Instead, ask yourself:
- What notes do I need to inspire myself in the moment?
- What mechanical bits are easy for me to improvise depending on the system?
- What mechanical bits are easy for me to simply reference (monster stats, etc.)
- Are these notes going to be useful repeatedly, or just for one time? How can I reduce the one-time notes in favor of reusable ones?
- How much can players effectively "go through" in a single session? Can I prep just enough to meet that, and do more later?
GM Plans vs. Sandbox
"Is there a general balance between the DM's plans and the PC's being PC's?" Well, most sandbox games I know don't have a lot of GM plans involved. There may be events going on within the setting, but they are often things that can be changed or affected by player actions.
The RPG Apocalypse World has a pretty good way of dealing with this... you write down a potential source of conflict ("The dam is cracking.") and then you list what will happen, over time, if no one does anything about it. ("The valley will flood.") and part of it is that the rules demand you give steps/signs of forewarning so the players at least know a problem is out there to be fixed. (Mind you, they may end up convincing or getting NPCs to go deal with some of these problems, but the players have to have a hand in making that happen.)
What generally makes more sense for me, in a sandbox game, is instead of producing a lot of "this will happen" type plans, is to simply lay out where major characters or groups are, what their needs/motivations are, and to play them the same way players play their PCs - you know what they're about, so it's easy to improvise.
Did the PCs blow up a warehouse of supplies? All the local groups are now scavenging or fighting over these kinds of supplies. Did one of the PCs leak crucial information about another group being vulnerable? Bandits from a rival group rush through and raid them for their belongings. Did the players save a town, time and time again from danger? They're either out and out friendly to them, or there's a political divide as the PCs have gotten "too popular" compared to the folks in charge.
In this way, you don't have to make too many plans, you just make personalities and needs and react to what the players do.