It is a very hard balance, I would agree!
DD is now 6, but when she was 4, she was involved in soccer and piano. Soon after, we dropped soccer when she was old enough to advance from clinic to league....as soon as it became competitive she completely lost interest and has never wanted to go back, despite her closest friends all playing soccer in a league together.
Now, DD6 is involved in more activities than I ever thought we would take on at one time, but I still make sure she has at least one weekday completely free of extracurriculars. She takes piano and jazz, is in chorus when it is offered at an after-school club, has tutoring once a week for enrichment purposes, and takes tennis on Saturdays. The tennis and chorus are not year-long, she is never in both at the same time.
The future problem for us is her interest in musical theater, and her desire to be a "triple threat". She did two musicals last year, but we took a break this year so she could try out jazz. At some point, this may all snowball into a ton of activities...especially with piano factored in...which is something she loves and happens to be very, very good at.
She also wants to play the cello or harp. Not sure what we're going to do about that...if anything, it probably won't be for another 2 years!
We have had to ask her to choose on multiple occasions, because she is interested in so many things: all things music and performing arts related, but also science club, after-school art club, girls scouts, 4H......
