Knowing when to 'quit while your ahead' is one of the greatest tools any trainer can use. Never ask a horse to do anything that it is not ready and able to do. Then, once you ask, make sure that the horse complies fully.
This is absolutely key, but unfortunately much easier said than done. Most recreational riders have little if any feel for when to quit, don't know what the horse can and cannot do, and lack the commitment to make sure they follow through. I don't know how many times I've seen people bucked/reared/thrown off a green horse, sitting there in the dirt looking utterly hurt and bewildered, asking "what happened?" when they pushed to far, asking a horse to do something it wasn't prepared to do, or didn't "quit when they were ahead". Or how bout when someone doesn't follow through, and suddenly they don't understand why 'princess' is trying to rear, buck, kick, refuse to do things.
those all important qualities Cherie mentioned are learned through experience and time working with horses, which is why, when someone complains of a problem, the best solution is to refer them to someone who possesses those qualities, and can help the person learn them, through hands on instruction, IE, a trainer.
I think the concept of pushing something outside its comfort zone to encourage growth and confidence transcends species. You are not really learning much living inside a comfortable bubble. Stepping out of the bubble, where there is much to learn, but its a bit uncomfortable, is pretty essential to development. Pushing a creature so far outside its comfort zone that it panicking and very afraid teaches very little if anything, and is rarely warranted, and that only in extreme circumstances.
you wouldn't stick a complete beginner on a set of skiis at the top of a double black diamond run and expect them to get safely to the bottom, and they certainly would not enjoy the experience, or want to repeat it. I think many horses that are scared by "flooding" get the same way; leery of people, fearful of whats coming, and eventually broken and resigned if its done enough.