Well, by muddiness I mean that too many sounds/instruments are using the same frequency area. As most instruments play around that 200-500 Hz area, the middle and lower octaves, these frequencies are adding up and the track becomes „unclear“. This effect is often take place in rooms, where room modes are extended, so you loose clarity. A lot of people think that this clarity is only done by adding the 5kHz area by boosting a couple of dBs, but the same effect comes when you just tame the 200-500 Hz area, by EQ or Compression. Sometimes it’s actually only a question of orchestration.
Yes, if you tame too much, you loose warmth and the body of the piece, so it’s good to have a reference which you refer to, to not loose perspective.
Does it make sense?