For many, a massive exercise in character backstory is seen as the hallmark of an invested player, something to be admired and encouraged. While I won't claim that all such backstories are dysfunctional, I do suspect that a great many of them are.
In a nutshell, I think that many instances of multipage character background are symptomatic of what I tend to call "damaged player syndrome." These are players, often quite creative ones, who have repeatedly had their creative contributions stomped on by GMs, or occasionally fellow players. More explicitly, I mean that their attempts to put their own creative stamp on a game have either been ignored (e.g., "No one cares about the brother who left you for dead!") or their contributions are deliberately sabotaged (e.g., "your lothario attempts to look suave as he flirts with the queen. You failed the seduction roll? Ok, you spill wine down the front of her dress.")
So let's say that a guy comes up with a character. And part of getting really into that character is imagining how cool he is. He might imagine the scene where all his wizard's careful plotting comes to fruition, and he's able to set up his former master before the Council of Wizards, finally gaining his revenge. Or he might imagine his sailor lashing himself to the helm as he attempts to ride out a massive storm as a kraken rises out of the depths. Often a player will imagine a number of these scenes. This is the stuff that makes a player care about his character! That's incredibly important! GMs and other players should fuck with it at their peril.
So what if the wizard's player never even gets the opportunity to exercise his political muscle because the GM or other players aren't willing to go in that direction (or just ignore the implict request to go in that direction), or the GM doesn't provide any opportunities for the sailor's player to take the story onto the high seas? The players start to feel frustrated. Even worse, what if the GM makes your wizard look like a political hack, and has the former master see right through your machinations before you even approach getting to the cool stuff. Now, not only are you not ever going to get the cool scene you imagined, but the GM is literally making your character look like a schmuck, which is totally against that awesome concept you were imagining when you created the character.
As I mentioned above, this is the stuff that makes you care about your character. It's why you were excited to play him or her in the first place.
A natural reaction, then, is to attempt to codify the coolness you've been imagining by turning it into backstory, and thereby hardcoding it into the game's setting. That way, even if your the character's coolness never comes out in play, at least that coolness is "protected." Everyone that writes lengthy back story assumes that the GM (and possibly fellow players) will be eager to read the backstory and care about it as much as the writer. Hopefully, this time things will be different. This time they'll be really into your awesome character and let him be totally awesome in the game.
Naturally, to make everyone truly appreciate the coolness of your character, you've got to paint the coolest picture you can. And that means taking those scenes you've been imagining and making them part of the story. That way, they've already happened and no one can fuck with it.
The problem is that when all the cool stuff has already happened, it can't happen in play. All your character's issues are resolved and you'll never get that cathartic moment in play. Sure, you might develop some in play, but it's going to take a lot of fumbling around between you and the GM.
Players that have sunk into a protective shell this way are often difficult to draw out, even when they join a group that embraces everyone's creative input. But it can be done. And recognizing the signs, like the eight page character background, is often the first step.