That’s a good question and accurate deductions.
Usually when overdubbing I only listen to one or two previously recorded tracks rather than the whole mix. I find that this helps with accurate timing as each recorded track is played (hopefully) in time with one “click track” (not necessarily a “click” track - but a common rhythmical track). This approach will not suit all recording jobs, but is often a useful approach.
Onto your main question:
The “Mixer Board” (View menu) duplicates the effect of the volume and pan sliders on the left side of the audio tracks, but with much bigger volume sliders, so they are easier to control. These sliders affect playback and do not have any effect on the audio data.
As a rough guide, reducing the playback level by about 4 dB per track will usually keep the mix below 0 dB. The exact amount could be anything up to -6 dB, but you do not need to be totally precise with the playback levels while you are recording. All you need is a “good enough” mix to allow you to record the next part. Precise mixing is done after you have recorded all of the parts.
Personally I’d like a “master playback volume” slider that either adjusted all of the track sliders in tandem, or acted like a Main Mix slider on a real hardware mixer, but we don’t currently have such a feature in Audacity.
Note also that when using 32-bit float as the audio track format, the precision is so high that you can amplify the track volume up and down by a lot and do it repeatedly with virtually no loss of sound quality. You would have to make really extreme amplification changes to cause noticeable deterioration of the sound quality. For example, if you amplify a track by -50 dB, then amplify by a further -50 dB, then amplify by a further -50 dB, and again by a further -50 dB (a huge total reduction of -200 dB) and then Normalize back up to the original level, I doubt that you will hear the difference from the original.
Theoretically, using the mixer board will produce higher quality than “destructive” amplification, but in practice (with 32-bit float) you can use either method. I often use a combination of these methods - sometimes it’s more convenient to use the Mixer Board (or track volume sliders) and sometimes it’s more convenient to amplify the tracks.
Tip: A quick way to amplify all tracks by the same amount: Ctrl+A (select all) then “Effects menu > Amplify”.