Physiologically, it's because your body is healing during the rest week and once you start training again you're starting back over. That's why I still continue to do some intensity even though I cut way back on volume.

Signs you need a rest week:

1. workouts aren't at the same level as you would expect (200w feels like 300, etc)
2. sleep disruption
3. your resting pulse when you wake up is way off the mark (like racing) from your normal resting pulse
4. have trouble getting your HR up (or it goes way too high for an effort)

Signs you're overreaching:

1. You get a case of the "kensuf's" and go midevil on people for no reason.
2. Irritability / crankiness
3. Lack of ability to concentrate.