An Essay on Writing - Part 1/2 (To plan a story)

How far should one go to create a backstory for a novel?  There are so many examples of how far some people have gone and its so hard to choose the distance one should take.

In my fantasy novel, I am currently writing, I knew I had to create a new world.  I then narrowed down that the action will take place only on a specific continent, so I mapped that out and just kind of glanced over some interesting places the characters were going to visit.  Then I had to try to figure out what kind of fantasy it was, did it have dragons, did it have griffins, or was it just like earth, with no real fantastical creatures?