So its been a little while since I've done a watch-through of the Next Gen...so my details/timing may be off a bit.

When the series starts, Picard is obviously Captain. We also see that Riker is promoted to Commander & First Officer (go Number 1 go!).

Then we have Lt. Commander Data, Lt. Geordi, Lt. Worf, and then Dr. Crusher & Coulsilor Troi. I do not remember their ranks being mentioned at the start of the series beyond the doctor remarking that she's the CMO.

We do not see then Data becomes a full Commander. Post season 1, he is just generally regarded as the Second Officer, and takes/is given command whenever Picard & Riker are not on the bridge.

I do not remember when Geordi is promoted to Commander either. But when he is promoted to Chief Engineer at the start of Season 2, he just sort of takes command every now and again. There aren't many instances when he is in command of the ship, as he's typically in engineering.

We see when Worf is promoted to Commander. That takes place on the movie Star Trek Generations. Remember the whole thing on the HMS Enterprise sailing vessel. He has to jump up and get his "badge of office". The only time we see that....

The biggest insight we see into the "who can take command" thing is in regards to Dr. Crusher & Counsilor Troi. If you remember, there is an episode in....Season 5?....when the ship is hit by the Quantum Filliment. It severely damages the ship. Troi is trapped on the bridge with O'Brain, Rho, and some scrubbs. One of which was in command of the ship when it was hit. Troi was not. When red-shirt scrub died, there was a question as to who was in command. O'brian points out that although not a bridge officer, Troi had the highest rank.

We then see in Season 7 (I think) that Troi is talking with Crusher, and how Crusher likes to take a few shifts as command. That's also the episode when Troi needs to take the bridge command test.

As per your original question...why so many officers on the Enterprise? I'm guessing that they don't have it set up like we do our own military...where there are only a certain percentage of officer positions available. Instead, based upon accomplishments/merit and all that...they are promoted. If they so desire, they take the bridge officer command test. And well...the Flagship of the Federation, with over 1,000 people on board in a variety of disciplines, and no quota...I'm guessing that many would have a higher ranking.

~Jeordam