This I agree with.
However, there one question I am left with; what about a character's goals and ambitions? Take your average first-level fighter. He was conscripted into the army, served in various posts, and is now out to make a name for himself as an adventurer. His goal is to one day become a lord of his own manor. Is this acceptable? What if instead his goal was to become a legendary warrior whose tales are told by bards throughout all the lands? What I wonder is where exactly is the dividing line between acceptable and unacceptable?
That's a good question too, and I find this line of questiong to be more fruitful to getting answers than either of us making broad statements.
I do suspect that VB hit in on the head that it's in the mind of the DM. A subjective, rather objective decision. Some players have some really stupid backstory ideas. Primarily because you gotta write a backstory the DM likes. If he doesn't like it, you've already annoyed the DM and the game hasn't even started. Supposedly impartial DM or not, them's the breaks.
Now I tend to expect a 1st level to be young (regardless of what the current ruleset may say, that's what happens when old people play new editions). As such, I don't tend to expect a lot of accomplishments out of PCs pre-game.
Having run a military campaign where the PCs WERE in the military, it might not be applicable for the PC to have quit the army. But then I'd communicate that starting point information before character creation.
Let me morph those 2 stories into back story paragraphs:
Joe was conscripted into the army, served in various posts, and is now out to make a name for himself as an adventurer. His goal is to one day become a lord of his own manor.
Bill's goal is to become a legendary warrior whose tales are told by bards throughout all the lands?
I probably don't have a problem with either of them (assuming there was an applicable army in the region for Joe to have joined).
What tends to bug me are the megalomaniac goals for 1st level PCs who shouldn't even know if such a thing exists or is possible.
While many players have goals for their PC to become a god, such a thought is likely not even possible in the small un-exposed mind of a 1st level PC. Give them some power and clues that godhood and greater power and possible, and NOW it's plausible that the idea of achieving godhood is a rational goal for your PC.
Certain backstory ideas bug the heck out of me. Odds are good, in the hands of a good writer, the same idea could pass my desk and not even make me twitch.
But in general, pre-game, I don't really want more than a paragraph of backstory. There's no point in making heavy investment until you've proven yourself, and you've seen how the game is actually going to go. Then it'll be worth adding on or re-writing (with out conflicting anything that's gone on before).
Perhaps my thinking is shaped by a wait and see attitude. As a player, I tend to start the game with that initial paragraph which at most says where I'm from and how I learned my PC class. After that, I need to see what the actual game world is going to be, and what opportunities there are. If the first session has us accidentally letting out a plague of rust monsters on the land, or being framed and wanted criminals (happened in the same 1st game session and not in that order) then we're going to be playing a survival game and whatever grandiose plans for a lord's manor or bard's fame are going to be quite irrelevant.
A lot of times, all I need to do as a PC is spot a problem, start fixing it, and opportunies will open up, and that's where goals start shaping.
That and it's my general experience that the player doesn't know the world well enough to craft detailed material before the game starts. Playing a session usually explains way more about the enviroment than any hand-out ever does. I've played in plenty of games where there's not a hand-out or briefing, so it's roll it up and welcome to the world.
From that, you might be able to see why I don't think a player is qualified to make much of a background before the game has started. They just don't know what makes sense until they see it for themselves.