Artists who release yearly versus release every 2+ years

There's definitely pros and cons. Waiting too long can cause one to lose relevance but it can also build up excitement. I also think there's more pressure to put out something impressive. This applies to shows as well.

Diminishing returns can happen for both facets. I think too soon can impact quality, but after a certain amount of time, I don't think it will help. For example, an album made after three years versus two probably won't see any increase in quality. On the other side, putting out too much music too quickly probably won't prevent you from fading, and could actually induce fatigue.