It means that they improved on an already good product and/or service? Like, it was good enough, but they didn't stop there, they made it even better. I've never seen it, but that's the first thing that comes to mind.
Usually when I've heard that phrase though, it meant that somebody fucked something up. "You just couldn't leave well enough alone." It means something was good and you went and tinkered with it and fucked it up.
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