Hi there, sorry this is so late! I check back here pretty infrequently, but I come with answers (if you still need them)
The base I use is lambs wool, it's useful for 2 reasons: it's cheaper than the wool top, and it felts faster so it speeds up the project time.
Over-felting is when you have felted so much the area can no longer be shaped or manipulated, there is also much more resistance when you use the needle. To be honest I have never really had an issue with over-felting, so I can't be 100% what you can do to avoid it, I think it's more of a problem with smaller projects.Usually when I am done with a project they still have a little give to them (if you squeezed them firmly you could partly distort their shape).
I hope you do give felting a go! It's very relaxing and is super easy to pick up.