JOEL - One dictionary definition of the word "moderation" includes "the trait of avoiding excesses". This concept works well if you are talking about things like the foods we eat, exercise, what we do in our leisure time, how much sleep we get, etc.; making sure we avoid unhealthy excesses.
Even in the practice of religion we may become unbalanced, especially if we concentrate our total efforts in one area while ignoring other equally important commitments. Scripture study, parenting, service, and church callings all compete for portions of our time.
The emphasis of one at the total expense of all others brings us short of the Savior’s expectations. He taught that we should do the one “and not to leave the other undone.” (Matt. 23:23.)

President Joseph F. Smith said:
"We may make evil of all amusements, but the Saints should not be unwise, but rather understand what the will of the Lord is, and practice moderation in all things. They should avoid excesses and cease from sin, putting far from them 'the lusts of men'; and in their amusements and pastimes adopt a course that looks to the spirit as well as the letter, the intention and not the act alone, the whole and not the part, which is the meaning of moderation. In this way their conduct will be reasonable and becoming, and they shall find no trouble in understanding the will of the Lord." (Smith, Joseph F., Gospel Doctrine, copyrighted by the Church of Jesus Christ of Latter-day Saints, 1919, p. 300.)

However, another definition of moderation is "the action of lessening in severity or intensity". When it comes to obeying certain commandments of God we can't afford to lessen our intensity in our obedience to them.
For example, there are absolutes in the Word of Wisdom(D&C 89) that, acording to latter-day counsel from our prophets, commands us to not partake of alcohol, tobacco, black coffee and tea. We cannot invoke the principle of moderation and say that we only drink a little alcohol or use a little tobacco once in a while. On the other hand there are other items mentioned in the Word of Wisdom which we have been told to use in moderation, such as meats, grains, fruits, and herbs.
We cannot have an attitude of moderation when it comes to living and obeying the vital commandments and doctrines that bring about salvation.

Elder Dallin H. Oaks said:
"But the Savior said that if we are “lukewarm,” he “will spew [us] out of [his] mouth” (Rev. 3:16). Moderation in all things is not a virtue, because it would seem to justify moderation in commitment. That is not moderation, but indifference. That kind of moderation runs counter to the divine commands to serve with all of our “heart, might, mind and strength” (D&C 4:2), to “seek … earnestly the riches of eternity” (D&C 68:31), and to be “valiant in the testimony of Jesus” (D&C 76:79). (Dallin H. Oaks, “Our Strengths Can Become Our Downfall,” Ensign, Oct. 1994, 11)

The prophet Alma illustrates the proper application of this principle in one scripture where he said:
"And now I would that ye should be humble, and be submissive and gentle; easy to be entreated; full of patience and long-suffering; being temperate in all things; being diligent in keeping the commandments of God at all times;" (Alma 7:23)

We should avoid unhealthy excesses in our lives but at the same time be dilligent in keeping all the commandments of God.