Brace yourself - here comes the dreaded wall of text

:
I'm with HONAW - "consistency of milk" is rather vague and specific ratios don't take into account the variable consistency of paint (brand, color, and age all factor into this) or the fact that different dilutions are more or less useful for different effects.
I'll only add water directly to my paint pots if they start to thicken, noticeably. It's not to thin them for painting, so much as to increase their shelf life (besides, sometimes you
want your paint on the thick side, like for drybrushing or tinting texturing pastes without turning them into soup). I thin paints as I go, which necessitates using a palette. I made myself a wet palette, which I prefer infinitely over the old plastic palette I was using - it won't magically thin your paints for you, but it does help them stay at the consistency you mix them to and extends their "open" working time, to the point that they can be stored between sessions, provided you have an airtight cover. If you're interested in going that route (which I would heartily recommend), there are plenty of tutorials floating around online, including some right here on Dakka.
When it comes to thinning, experimentation is key. The best way to get a feel for it is to lay a blob of paint down on your palette and put a few drops of water near it. Pull some paint out into the middle, then some water. Mix it up and lay some down on a test model or primed scrap material to see how it behaves. You now have a pool of paint that can be adjusted on the fly, either by pulling more paint in to thicken it or water to thin it. This should help you get a general feel for how paint behaves at various dilutions - once you move on to a real model, you can decide what you need for the current task. With practice, you can add water by the drop or brushload, but without experience, the greater control and ability to play back and forth that this method allows for is well worth the wasted palette space.
Now, for basic painting, solid coverage is the goal, so you want to dilute as little as is necessary to achieve smooth coverage and even flow. When you're doing your initial experiments on the test model or scrap, start your mix on the thick side and dial it back, bit by bit, until the paint start behaving properly. That's roughly where you'll want to be for basecoats and solid areas of color.
One more thing to consider when using dilute paint is brush load. I imagine this was part of the issue when you first attempted thinning. Dilute paints soak up into the bristles of a brush and then flow out of them - you're not simply using the bristles as a flexible tool to push around a viscous mix (at least not anymore). If you overload your brush, paint will tend to pool and run once you touch it to the model. Rinse your brush and gently dry it on a paper towel after mixing, then only draw paint into the tip. If you soak up too much, touch the tip to the paper towel to wick away the excess. With a properly loaded brush, even paints diluted to the point of becoming tinted water will stay where you put them.
It's a lot to take in, at first, and
everyone has their own $.02 to pitch in, but it's all really stuff that you need to experience on your own, and that boils down to (guided) experimentation. Well, I've rambled long enough - now go do your homework!