In my experience, the most important thing is for the Mercy to focus on staying alive as well, especially when her ult is full. Knowing when to hide rather than commit to healing a doomed team (especially when the enemies pull their ults) can turn the entire game around. I'm still not great at this, because I really love keeping everyone alive or damage boosting the DPS hero of the team who is on a kill streak, but knowing when to wait and bring everyone back after the storm is what good Mercies always do. I loooooove it when that happens.
Yes. Knowing when to back off and stay out of sight is very important. Positioning overall is one of the most important qualifications of being a good support, and Mercy more so even than others.
For KotH maps especially, staying in the most obvious safe areas can be fatal, because it's likely the first place a flanking Reaper will look towards.
Also, and this doesn't just go for Mercy or supports, but having a mental note of what ultimates the enemy team has available, and when they should be up can be crucial. For instance, Zarya's ult can be devastating, and it's part of your responsibility as Mercy to know when that is coming, keeping a safe enough distance to avoid getting caught in it, and possibly quickly revive afterwards.
Jumping towards an isolated dying teammate, or into the fray is often tempting, but in many cases not worth the risk.
Additionally, you should be taking advantage of Mercy's eye-sight free healing to look around as much as possible for enemy positioning and flanking. And finally, I think a very important part of Mercy is knowing how to defend yourself. You can't just rely on running away or jumping always. Sometimes you will have to stand and fight, often catching your opponent off-guard. I don't know how many times I've soloed Reapers, Soldiers, Genjis, or Tracers who think of Mercy as a free target. Her weapon does a lot of damage, and it's fairly easy to get in some headshots.
EDIT: Something I forgot to add that I think is important about reviving: It's good to have a sense of your team's momentum in a push. Sometimes reviving just the one tank or other player that was making that possible is worth it.