Like Bloo, I generally need a basic simple setting to really get involved in an rp or to kick off a story I'm writing (though, the only one I've ever really invested in has been an ongoing project, through 4+ years LOL).
I've found that putting all effort forth into the lore and background of the story doesn't just kill the flow of character's actions, but really kills their dynamics too. Suddenly, Elfor the Wise just becomes that one elf from Alvesta that has some weird powers or somethin. The character starts to revolve around the location, instead of the other way around. This can especially be true when adding in too much background information that doesn't pertain to the story or isn't even mentioned in it. It just gets in the way, and makes for a lot of time taken up trying to think if your character fits into the lore, rather than coming up with a cool character design and fitting the lore around them. The extra extra stuff can be added in after the story is already finished, imo.
I think we tend to forget ideas can be scrapped too. Even the really big important ones can be removed to make way for smaller, intricate ones.
I guess everyone has their own process to things, but I prefer to make the characters and shape the lore accordingly.