You don't have to turn the bin. The worms will churn things up as well as seek the area most comfortable to them. But I rummage through my bin regularly just to see how things are going. I'm told that it decreases production a little, but I can live with that.

As far as your picture of the "clump", I see worms in there, so how bad could things be? :)

I just can't figure out what's too wet and what's too dry and what is just right.

From the picture, it looks like you are using a cross cut shredder. I use a strip cut because it stays fluffier and does not mat as much. Too dry is not hard to figure out. Too wet is a whole other thing. My worms seem to love lolling around in wet castings. I really only do a lot of managing when there is a smell.

I think that the trick to using a cross-cut shredder is to feed the paper into the shredder in one- or two-ply layers. When you have a nice big pile of shredded paper, reach in with your hand and fluff it up good. I get REALLY fluffy bedding that way---and it STAYS fluffy, and doesn't mat as much when moistened.

The downside is that using single or two layers seems to cause paper to bunch up and clog the shredder blades sometimes. Just make sure you stop every few sheets and clean it out.

I use paper shreds plus spoiled hay, crumpled leaves are nice too. I have less compaction since I started using a 2-3 componenet bedding.

I do move/turn mine sometimes because if the bottom is really wet, and the top is really dry, I dont want to add too much moisture and flood the bottom out. If i have a large top area that is dry, ive started using a handful of moist bedding.

I feel that as long as youre not throwing the bin, and using your hands when practical, its not that damaging to stir things up a bit.