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We use this expression to warn someone not to do too much of something.
Written: Yes
Spoken: Yes
Formal: No
Informal: Yes
Example 1
I'll be up all night. I've got exams tomorrow and I haven't finished revising.
Don't overdo it. Make sure you get some sleep!
Example 2
What are your plans for the holidays?
I think I'm going to go to the gym every day to lose a bit of weight.
Don't overdo it - be careful.
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