Perfectionism is not thinking of oneself as perfect--the word for that is grandiosity. Perfectionism is the practice of trying to proceed in a many which avoids all possibility of criticism. It is based on shame, and it has become a social norm.
In pleasurable undertakings, perfection is irrelevant. For instance if one does an adequate job of planting a garden, or cooking some food, the result is good. The concept of perfect arises only in truly man-designed undertakings like tests. Increasingly, our social interaction and child-raising has become like a series of tests. The belief arises that to accepted by the human community, one has to get a 'perfect score'
The ego easily slips into the mode of trying to be perfect, losing not only the concept of 'good enough' but also thinking it can control everything, even nature. Even time is considered subject to the ego--hindsight is misused and the belief is strong that all problems should have been foreseen. When the inevitable evidence of non-perfection arises, denial or rationalization is used to protect the self image. Both relationships and reality testing are impaired. Self-deprecation, contrasted with humility, is an aspect of perfectionism because it is a disingenuous apology for not being yet perfect. With perfectionism, cooperative undertakings are discouraged, because self-sufficiency is seen as the basis of perfection.
The Loss of 'Good Enough'
One deleterious trend related to perfectionism is the developing social norm that any problem has to be addressed in the 'best' way as opposed to a 'sufficient' way. There is a folk expression "There's many ways to skin a cat" but one almost never hears this expression anymore.
The problem is, of course, that in most matters, there is usually no way to established what is best, everyone has different ideas. Because there is never certainty as to whether the best is being done, there are constant demands to change course. There is no sense of 'enough.' The downside is 1) wide spread self doubt, people don't feel competent even in everyday matters, and 2) tried and true sound practices and principles get abandoned and forgotten, in the rush to find some tricky or unique solution to the present instance of the problem. Opportunists often rush into the gap, proposing generally unsound approaches which further their own interests, because skeptics of the new have the burden of proof that the proposed solution will not work well in this particular exact instance.