Why do most retail investors still struggle with US ETFs even when they understand stocks?

I’ve been following US markets for a while and I understand individual stocks reasonably well, but ETFs still confuse me in terms of strategy.

For example:

Should ETFs be used as a long-term core holding only, or can they also be actively rotated like stocks?

Is it better to hold sector ETFs (like tech or healthcare) or just stick to broad ones like S&P 500?

At what point does ETF diversification become “over-diversification” and reduce returns?

I feel like I’m missing a clear framework for ETF allocation vs stock picking, especially in volatile market cycles.

Would love to know how experienced investors balance both in a real portfolio.

#MyStocksQuestion