It's really important to understand this cycle. Every time you decide to avoid a social situation, your anxiety lessens, which feels great in the short run. But in the long term, avoidance only leads to more anxiety because you don't get chances to practice skills and to discover that the reality is often less scary than your imagination.
The best way to reduce social anxiety is to practice socializing intentionally. You can set measurable and realistic goals, like "I will spend 3 minutes making small talk with the barista" or "I will compliment my coworkers twice weekly" or "I will stay at the party for an hour and talk to 2 different people, asking at least 3 questions each time."
Find a small way to start exposing yourself to social situations, even if it's just getting out of the house and going for a walk in the park among other people. The more you avoid, the worse it gets - even though it will feel great initially when you avoid.
I definitely feel this many times. What is the line between trying to practice and things I should be ok avoiding?
I'm not am expert, but I would say if it's a thing that could cause you great (psychological) harm, avoid it or put it off until another time when you're better equipped. If it's something that makes you nervous and you have the energy to deal with feeling nervous, go for it! Often, you'll feel better for having been brave.
This is pretty much how my therapist explains it to me.