As far as I have understood it, this is mostly a result of overbuild infrastructure. They planned the capacity of some central pipes and sewers in a time where modern water saving technology wasn't yet used as much or even invented, because such projects are supposed to last a few decades. They build for growing usage and population based on the historic growth, but then water saving became a big thing, appliances became much more efficient, and people moved to other parts of the country and the bigger cities etc. So now that infrastructure is underutilized and flow is too low in some parts. But this is managed by the water companies, which know best where and when to increase flow. This is pretty localized, for example when they planned for a future housing development that never came, and just flushing twice won't put a dent in it anyways. Building a papermill in a suburb or countryside is also probably not the most efficient way to solve it.

There's no such thing as "excessive amounts of water." Just because current demand hasn't exhausted our current water supplies doesn't mean it's not worth conserving.

Here in Canada we have the Great Lakes which account for 21% of the worlds fresh water. And they're rapidly becoming polluted.

Humanity always finds a way to squander whatever resource you think we have "excessive amounts" of.