Worms require a lot of moisture in their little bin-world. Some folks recommend that worm bedding, when picked up by the handful and squeezed out, should emit 2 drops of water. It's a good goal to aim for, if somewhat unrealistic for the ordinary household bin.
An ordinary household indoor bin, when ensconced in a stable ambient temperature, can get by with slightly less moisture. Say, one drop will do ya'.
Which is not to say that worms will tolerate dried-out conditions. Not at ALL. Worms breathe through their skin, and they need moisture to resperate. A dry bin is certain death for the little pinkkids.
The best option for a small household bin: keep lots of damp (but fulffy!) top-bedding on the top. Worms gravitate to moisture, and wet bedding will keep them moving steadily upwards. Top bedding must be fluffed up and well separated. If wet bedding compacts too much, it can inhibit airflow.
Standing water is definately not a good thing. You know when you see lots and lots of worms on sidewalks after a particularly heavy rain? They are trying to escape their waterlogged environment because they don't have gills. If the area is too wet, they will do their best to flee it. Worms will drown in standing water.
Food should be placed under damp top-bedding. This keeps down odors, discourages flies, and makes food readily available to the worms. But food's another post...