How do you believe exceptional leaders distinguish between tasks that require personal oversight versus those best delegated to team members?

Exceptional leaders know that success isn’t about doing everything themselves—it’s about knowing what to focus on and what to entrust to others. The key lies in distinguishing between tasks that require their direct oversight and those that are best delegated.

They start by considering strategic importance. If a task directly influences the organization’s mission or long-term goals, it usually calls for their involvement. On the other hand, operational or routine responsibilities can often be handed off to capable team members. Risk and impact also play a major role. High-stakes decisions with significant consequences demand closer attention, while lower-risk activities can be delegated with confidence.

Leaders also weigh their own expertise against the growth potential for their team. If a task requires their unique skills or authority, they stay involved. But they also recognize that delegation is a powerful tool for developing others, and they use it to build trust and capability within their teams. Time sensitivity matters too—urgent, high-impact tasks may need their direct input, while those with more flexible timelines are ideal for delegation.

Ultimately, it comes down to trust. When leaders have confidence in their team’s abilities, they can delegate more freely and focus on what only they can do. Tools like the Eisenhower Matrix help guide these decisions, but the real skill lies in the leader’s judgment and their ability to empower others while staying aligned with the bigger picture.

Exceptional leaders prioritize the tasks and focus on the high impact deliverables. Trust in the team and empower the team to take the decisions

I wouldn't say this "trick" is only for exceptional leaders. Any manager who has responsibility and oversight of other's responsibilities needs to take care of this.
First, most new managers trend to do micromanagement. You have to recognize that, even though you know how to execute the tasks you delegate, you need to trust people and give them space. They need to learn.
Second, some managers try to focus on critical path tasks. The tasks they need to ensure happen correctly so the full project plan does not derail (and they end up doing micromanagement of these tasks), and just delegating the rest (mostly ignoring them).
Third, if the manager has more "experience" will be able to review the tasks, and identify for each tasks what is the risk of the task not being done on time or the possible dependencies. Then, identify the tasks which risk is under control and the responsible has the capacity to resolve any deviation. With this, this manager will  be able to delegate the first set of tasks, where the assignee can execute and resolve. Then he will focus on the other tasks. The level of oversight will depend on the experience of each assignee.
So, in summary, is a combination of task type, risk and assignee level of experience. Like this:
Task Type - Risk - Assignee Experience - Delegate?
Simple Low Basic Yes
Simple Low Good Yes
Simple Low Excellent Yes
Simple Medium Basic No
Simple Medium Good Yes
Simple Medium Excellent Yes
Simple High Basic No
Simple High Good No
Simple High Excellent Yes
Medium Low Basic No
Medium Low Good Yes
Medium Low Excellent Yes
Medium Medium Basic No
Medium Medium Good No
Medium Medium Excellent Yes
Medium High Basic No
Medium High Good No
Medium High Excellent Yes
Complex Low Basic No
Complex Low Good No
Complex Low Excellent No
Complex Medium Basic No
Complex Medium Good No
Complex Medium Excellent No
Complex High Basic No
Complex High Good No
Complex High Excellent Yes

Leadership comes with both responsibility and privileges. Whichever of the two you think is more important (or your team perceives) determines the quality of your leadership.

A leader should take responsibility for the outcomes (good and bad) of their entire team - so delegation does not remove the accountability for oversight. Establish the trust and nurture the competency to enable greater delegation and autonomy - support the team members with clear objectives and expectations that are realistic.  But a good leader will ensure that the team understands "where we want to go" while granting some latitude on "how to get there". 

Personal oversight is required when the scope, scale or strategic implications of a task/decision/action are too high stakes, risky or uncertain to be delegated. You have to know your team to understand the limits of their capabilities. If you're putting a member of your team in a situation with a low probability of success , or there is lack of clarity, then the leader must assume accountability by their personal involvement.  

I believe in the Eisenhower principle, using "Importance" and "Urgency" to decide if things need 1) scheduling for later, 2) Do it Now, 3) Delete, or 4) Delegate.