Good writers know that gathering (or inventing!) copious amounts of information is an important part of the creative process. You need to know all about the technology, belief systems, and social structures in your setting, whether it's the real world or a fantasy realm. It's also vital to have a thorough understanding of what makes your characters tick. Neglect the fact gathering/character generating/world building part of the writing process, and you'll find your story lacks depth. Readers won't be able to connect with your work because you haven't.
So you've done your homework. All your ideas are fully fleshed-out. You could tell me the life story of every major character in your work, from childhood birthday parties to what they eat for breakfast in the nursing home. You can explain all the aspects of each character's job, using any necessary technical jargon. You've written a twelve volume holy text for your fictional religion and mapped out seven thousand years of theoretical history.
Now comes the hard part-- being able to leave almost all of it out of your story.
That's right. If you want to craft a truly professional-quality story, most of your background work will never grace the printed page. Like the skeleton of an animal shapes its flesh, your background will support your story without being explicitly seen. The biographies you so painstakingly crafted will help keep your characters' actions consistent and believable. Your understanding of the setting will show in every scene where appropriate details come into play. The work you put in will not be in vain.
However, keeping the background from tearing a hole and protruding through the story can be challenging. One of the hallmarks of amateur writing is the so-called “info dump,” a passage that takes the reader out of the story in order to convey information, especially when that information is irrelevant. Info dumps usually involve the author stepping in with a narrator voice rather than showing the story from the perspective of the character.
For example, if you describe a building using its exact dimensions, e.g. “the house was twenty four feet high and thirteen and a half feet wide,” you are probably not speaking from the character's perspective. When noticing a building, most people have only vague impressions, such as “it looked like a two-story house.” If you do want to convey something quantitative, try to use “units” that are more intuitive. For example, “in no more than ten steps, she walked from one end of the house to the other”.
Another common situation where writers will use info dumps is when conveying information about a character's appearance. This is a marked mistake in perspective; at any given moment, most of us are not thinking about our own appearance. Beginning a story with a physical description of the main character is almost always indicative of a novice writer. Physical details about your main character can be conveyed naturally throughout the story. For example, a very attractive character will probably receive unwanted attention from members of the opposite sex and respond in a blasé fashion. A less attractive person will feel shy and self-conscious if approaching another character to whom he/she feels attracted. A very tall person might have to duck when passing through a low doorway, while a short character may need to stand on a chair to reach a shelf.
If you are reading this and feeling a bit discouraged, wondering if there are info dumps in your own work, take heart! The problem is an easy one to fix, especially with the help of a few “beta readers” who can tell you when you have violated the mandate of “show, don't tell”. If someone tells you to omit a passage, my suggestion is to remove it and then set the story aside for at least a day or two. After a suitable amount of time, reread your story and ask yourself what, if anything, you have lost by removing the passage.
Does the story still make sense? Does it still flow nicely, without seeming choppy or rushed? Is it still enjoyable? If so, then you probably spared your reader a few details that would, in all likelihood, bore him or her.
If you find that the missing information does indeed compromise the story, try to fit it in gently, so the reader does not feel lectured. To help with that task, here are some links to several excellent articles.