I should point out that DM's are the world builders mainly, Players just have some say in the matter. Backgrounds won't be so deep that we could build an entire world out of them, they're just something that a DM can pick at to get plot hooks.
example.
Urist the Dwarf Rogue, blah blah blah Stone city, blah blah blah grew up on da streets, blah blah.
A DM could easily make a quest about street urchins that grew up with Urist.
Quest hook without player history- Thieves in Stone City are becoming a problem.
Quest hook with Urist's history- Word is that Urist's old gang is making big strides in the criminal underworld of Stone City.
While not the BEST example it kinda shows what I'm aiming for.
It's not so much about world building as creating a coherent place for adventurer's. Players would never write out their history checks, that'd be the DM's job.
Good = Faragorn was born in *town* in *year*, *how growing up was like*,then big guy showed up and said "Your a wizard Faragorn!" but that was obvious to Faragorn as both of his parents were also wizards. He then enrolled at *wizard academy* OR took tutelage under *cool wizard guy* at the age of *whatever*. (then he'd fill out his friends and rival stuff, likes and dislikes, flaws and such [not just the feat type, like character ones]).
Bad = Baxter was born in *year* and was given away to the *chantry of someone*, *50 page document filling out every little detail about the chantry, the church, and the gods history leaving the DM with little to nothing to "work with" because you pretty much explain everything*, [This space is empty, cause this is where information about your character would go, but you didn't fill it out], *something that makes you overly powerful, like becoming king [nobles and princes are okay, but your adventuring for a reason [[not to say you couldn't someday become a lord or king, just that's for high leveled, survived some shit characters]]]
In this type of setting you should really love your character, but not so much that you won't let things that effect his outer being get you mad or something, if a DM kills your wife that you met in game and had kids with (I'm assuming the single adventure thing that years will go by pretty quick instead of.. never.) then deal with it, don't bitch at the DM [unless he's being a dick on purpose]. Leave stuff open, like you never knew your father, oh look your level 7 and people claim your some guy, better go find him (PS oh shit it's your dad) before he causes more trouble and spoils your good name. The player could think it's some changeling or a rival in disguise or whatever. Mother dead? Guess who murdered her, that's right this corrupt sheriff of the county that you and your group has been investigating in a short level "meh to meh" campaign.
Players should be spring boards not bibles. <Probably the easiest way to put it.