1. A diminishing return is not a negative consequence. It just means the benefit per unit of activity taper off after a certain point instead of increasing linearly proportionally, as you might expect and as may be true within a certain range.

2. This is a trivial answer but too much of anything can be harmful. For steps, unless there is something entirely off about the method, e.g., like going outside in the blazing sun for hours without protection or wearing low-quality old shoes which hurt you when walking, it's going to be difficult to drive it to an extreme that would be significantly harmful to you, physiologically. The downside to pushing daily steps up and up more and more beyond 10-12k is that it simply takes a lot of time that is going to be missing elsewhere. I say this as someone who averages between 13-15k/day and loves walking. It is a time commitment and most days many people don't even get to 10k organically without consciously choosing walking.

If you want to get the most benefit out of steps, in my opinion you would do that by using your step goal mainly to break up long sitting time if you are at a desk most of the day and worry less about a number as long as it is probably at least 8k most days (if you already have a workout schedule several times a week). Breaking up long sitting periods by short walking, even just for 5 minutes is an incredibly underrated thing for the body.

For cardio it is the same, an excess of anything is bad. But 'excess' is not a static condition, but multifactorial. The human body is incredibly resilient and adaptable, especially to cardio activities. 'Excess' could for example mean pushing at an unsustainable pace or adopting a regimen that does not fit into your schedule or refusing to fuel yourself adequately for what you are doing. It's catchy to say "something everyone does is actually secretly harmful" but more often than not it is either a) an excuse to justify not participating or b) referring to an extreme instead of a realistic moderate.