Optimal hydration levels are important for a host of bodily functions and a decrease of even 2% water can lead to a loss in performance or reduction in bodily function.  
Optimal levels and intake are extremely individualized and as such it is impossible to give recommendations, however if you feel that especially during workouts your water intake is hurting your performance then action should be taken to correct this.
While drinking when thirsty is as good advice as any, it is just as often unsuccessful as it is successful often for reasons as simple as being occupied with other day to day activities.  
For this reason, one strategy that can prove helpful is to set a simple 60-90 minute reminder with an alarm on your phone or watch to drink 8-16 oz of water and see how you feel from there.  If you are peeing excessively and it is clear, then you can decrease this number, if however you notice you feel better and cravings are decreased due to a simple full stomach signaling, then this will be the level you try to maintain.  There is even limited evidence that the body may experience a slight jump in caloric expenditure, or metabolism, during the hour following a 16 ounces of water being ingested.