How extreme I get depends partly on what I'm using as my basic build chassis. Something that's already very capable with a little know-how, like a sorcerer or a psychic warrior, I don't really do much optimization there -- there's no need, no challenge, and little fun. Something that's so low-powered it can't keep up when played straightforwardly, like a fighter or a warmage, that's where I choose to flex my optimization muscles and produce something crazy and awesome.
A lot of the time I look at the mechanical side of D&D as a puzzle to be solved. There are so many pieces, many of them mismatched, all of them incomplete, and it takes a lot of turning, rearranging and review to convert them from a box of scraps to an image of something beautiful.
That's not to say that I neglect or dislike story. Story is actually why I got into optimization in the first place. I feel, as many optimizers do, that a character's abilities should reinforce his story, not expose it for a farce. I think it's disappointing, embarrassing, and poor roleplay when a character's background writes checks his statistics can't cash.
A couple of examples.
A friend of mine had a character called Jorlin Bearcrusher. He'd gotten his name because, as a youth, he'd gotten lost in the wilderness, encountered a wild bear, and by the time he was located they found him battered but triumphant atop the mangled corpse of the beast. A situation came up in the game where he actually was required to engage a brown bear unarmed, solo. He was expected to be fine, because he'd done it before in his backstory, and he was hardier and more experienced now. Jorlin couldn't get it done in the grappling department, and died. It wasn't even sad, it was just lame.
I had a character called Lerris Wyrmspeaker. As a youth, he'd heard of a dragon sage near his homeland, scaled a mile high stone pillar to her lair seeking guidance, calmly struck up a conversation, and she became his friend and mentor. When Lerris was called upon during the game to replicate these feats, he could do all of them -- he was a strong, charismatic, highly skilled climber and diplomat, with immunity to Frightful Presence and to fire (including breath weapons of that type), and with enough hit points to withstand a true dragon's physical onslaught if necessary, for a while. When the party was ambushed by a black dragon in a swamp, Lerris tanked it until he could talk it out of attacking. When they were required to slay a blue dragon by one of its rivals, Lerris led the party into combat and they defeated it handily. He scaled walls and cliffs like a squirrel up a tree, and when a rescue was needed in the blazing inferno of a vandalized temple, he rolled right in with fireproof confidence and no hesitation. Lerris was very popular with NPCs and with the other players, and he lived long enough to retire, rich, celebrated as a hero, married to an ice queen type he'd gradually won over, and founding a new religion dedicated to the (now ascended) dragon that had started his whole career.
Jorlin wasn't optimized. Lerris was optimized, not for real ultimate power, but to be able to do what his story said he was supposed to. Jorlin didn't last long, and nobody really cared when he went. Lerris went the distance, and everybody liked the character.