But too much of anything can be harmful. If I read over-frequently and without breaks I may well compromise my eyesight and end up needing glasses. Too much vitamin A (carrots) can increase fracture risk, and too much vitamin E (vegetable oil, lotion) can increase your chance of dying younger in general. It doesn't mean that reading and vitamins are inherently bad for you.
Curiously, only computer games significantly reduced slow-wave sleep (helps consolidate "factual" memory) and harmed verbal memory performance. It also took longer for computer game players to fall asleep, at which point they entered into intermediary "stage 2" sleep more often. Spatial and procedural memory processing tend to occur in "stage 5" or REM sleep. In short, the study essentially concludes that playing computer games excessively actually harms verbal and other types of memory performance by affecting sleep patterns designed to re-calibrate the brain.
How much is too much? Like anything, it almost certainly depends on individuals, and as well, I imagine, the type of game. From the abstract, the study doesn't appear to break performance down by game type or genre, which begs the question of how a marathon Civilization session might compare to sleepless nights playing World of Warcraft or a thematically trite platformer like Sonic or Mario.
I always think of Harvey Steiman here, who once said "Everything in moderation -- including moderation."