My short answer is that for me, I know my wardrobe is too large, not by the amount of laundry I'm washing and folding, but by how long it takes to put away. It's a riff on Marie Kondo's second book "Spark Joy", when she talked observing a professional chef in a kitchen, and realized the determining factor in how you organize, is the ease with which things can be put away after using and washing.
If I have a backup of clothing on the bench in my bedroom, I know it's time to cull the herd.
The deeper dive is that, on most days, I will have 2-3 outfits that I wear, not including pajamas: hot yoga, then an ordinary daytime outfit, then 5-6 days a week, a public-facing evening activity: usually band rehearsal, filming auditions, or socializing.
I pretty good about observing and editing out things that are showing wear, get changed out of quickly, or just aren't my style anymore. Usually while it's still in good enough shape to launder and donate, or resell.