Q: When should I normalize, and by how much?
In the days of analog recording it was important to set the recording level so that signals peaked close the the maximum allowable level before distortion would occur. In this way, normalization happened almost automatically. No-one would ever think about normalizing a signal after recording, and in any case it would cause further noise and distortion.
It is nowhere near as important in multitrack digital recording to set the level anywhere near peak. The signal-to-noise ratio of a 24-bit digital recording is so vast and the amount of distortion so small that for any practical purpose it wouldn't matter if your signal level was 20 dB below peak.
You might worry that the meters hardly twitch when you play the track, and the waveform display looks like a straight line. Well you can live with that. The only problem might be if you are mixing and have pushed the fader all the way to the top, and the signal isn't as loud as you want it.
What you can do is add gain, if you have a gain plug-in. Or you can normalize the track.
waste spend time on audio forums, then you might be led to believe that all manner of ills are caused by normalization.
However the truth is that if doing it makes things more convenient for you in some way, just do it without a second thought. It is true that any process you carry out on a signal degrades it slightly. But it really is a tiny difference that you probably won't hear and your client or market certainly won't.
Now, the question of 'how much'...
Your normalization plug-in might have options. It might offer 'peak' or 'RMS'. Choose peak... RMS is a different issue that I'm not talking about here.
Also it might offer a level to normalize to, from 0 dBFS down to some arbitrarily low value. Choose 0 dBFS and normalize all the way to the top. If you're going to normalize, it would be hard to find a reason not to.
So in summary, don't bother normalizing unless you feel that you need to. If you feel you need to, do it without a second thought, and go all the way to the top.
P.S. Normalizing your finished mix file is a different issue.