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In my experience, the players don't tend to get overwhelmed by backstory simply because they'll never know about most of it, or else it will be revealed gradually over the course of many sessions. I think a lot of the backstory is just there to explain why the NPCs behave the way they do and what they're trying to accomplish, which can be really helpful to know if the adventure goes off the rails.
Much of the backstory is there to inform the GM, not necessarily the players. Curious PCs will want to investigate the "what/when/where/why" of the story, and I have found it very vaulable to have that spelled out so clearly. Much of that informs how NPCs get played. Many of them are too interesting to only show up for the boss battle just to get killed in five rounds. I like to introduce villains as NPCs in a non-threatening situation once or twice before the fight begins.
I have handed out some of the backstory to the players in the form of recovered books, artwork, mosaics, and conversations with NPCs that knew a thing or two. Of course, my players tend to be interested in asking lots of those kinds of questions. PCs more motivated by profit or "what's happening NOW" might never bother find out the backstory.
It all depends on the kind of story you want to tell with your game!
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It really, really depends on your players. For example, I have a gnome bard in my party trained in every knowledge skill who lives on discovering and exploiting backstory, so I actually still have to fill in gaps.
The trick with the backstory as a GM is not to sweat it too much. Read it through, assimilate what you can and see what makes sense. What makes sense to you is the actual backstory for the game.
Cheers!
Kinak
When running it, I found the background information to be useful to me, when the players don't act as expected. For example, there's a love triangle among NPCs in Burnt Offerings, which I used to figure out how some of them would act in a given situation. One tried to save another, for example (instead of, say, running away), and the would-be rescuee sold out the would-be rescuer on the first chance to save their own skin.
Limited use, sure, but this specific instance was one I remember.
But really, it's to help the GM know what to do. Would character X know information tidbit Y? Would character X surrender, lie during interrogation, or spill the beans? A tactics block might say "fights to the death", but if something unexpected comes up, maybe that character might change their mind. That sort of thing.
Edit: I second Landon's 2nd paragraph. Read, absorb what you can, work with that. Tailor things to your liking. I made a few mistakes myself, and the players were none the wiser, and it made things interesting anyway.
Plus its just fun to read. I appreciate the time the developers take with the additional backstory. It takes me 2 years to run an AP, but I get to read everything that I don't have time to run/play and I enjoy the stroytelling aspect of it all.