We'll start with the "empty world" problem. What I mean by this is that, while the characters and plot may be described, the area around them is left completely up to the imagination.
Ex. "She whirled back at him, swinging her sword carelessly. He stepped back and tripped over something - she took advantage of this and flipped over the object and jabbed the sword into his chest."
If you don't have enough sensory details, the reader won't be able to picture the world, the story, that you're trying to create and won't be as drawn into it as they could have been.
Now to the opposite end of the specturm; purple-prose and over-information. I find this arises, usually, though not always, as a result of an authour trying to overcompensate (for lack of experience, not lack of skill) or having been taught in school/other classes to overload the reader with as much sensory information as possible, to "flesh out the story". When a writer gets too descriptive in a story, it distracts from the narrative, while annoying the reader.
I'll give an example (from one of my works, a few years back):
While this may have been...okay, if I were having something happen near the river, but the actual events of the chapter had absolutely nothing to do with the river at all and took place within an inn, with the story never coming back to that area ever again. In this, I'm just bogging the reader down with irrelevant details that do nothing to support the story.
You want to reach a happy medium between the two extremes; you want to have some detail, but not so much that it overwhelms the actual plot of the novel/short story.
Now, we can move right onto how to develop a good setting, and how much you should delve into settings.
A fantasy novel, especially one taking place in a different world, will definitely need more details about the world than, say, one taking place in a high school. However, both need to be developed; the best way, I've found and feel free to disagree, is to subtly introduce your world in sentences, rather than paragraphs, to avoid info-dumping.
Ex. She takes a deep, quavering breath and stands up, disentangling herself from blankets and a pair of arms. There is a bathroom in the corner of inn room and that is where she goes to, because there's a mirror. It's lined with mold, green grime, and is blurry with thousands of fingerprints, but it serves her purpose.
This is a decent example of that; from that last sentence you can infer that that the room she is in is filthy, a filthy inn, then, probably in a city. The phrasing also conjurers up a very specific type of imagery, which gives the reader the mood/setting that you were going for.
This goes into a bit more depth than I do, and covers characterization and voice as well.
This is also a quick exercise to help you flesh out your writing a bit more.
Have fun world-building and writing, everyone!