Well, I have a few experiences to go by on this one.
1. I have a teaching degree. Though I do not teach now, I have subbed for nearly every grade and subject imaginable (including Special Education), I student taught and I was a STA for years before that. When kids aren't being challenged, you can see their eyes glaze over in boredom, the disruption kicks up and the chitter-chattering begins. Sometimes this is due to "what can I get away with" or "I HATE this class", but generally kids will listen, no matter what age or grade, if you show that you care and that you want them to "get it". If it's too simple or too hard, they simply disengage, and you can tell pretty quickly. Also, if they are getting work done in 5 minutes (assuming the answers they provide are correct), that's a red flag, too. I always liked to have "extras" available when I student taught that were fun yet challenging and pretained to the lesson at hand for those students who needed a little more of a challenge or wanted to put forth extra effort.
2. With my oldest son, everything comes easy academically. He rarely struggles. The key with him is to let him expound on what he's learned, to keep his imagination going, to let him go further than is necessary (within reason), to offer that extra option, etc. If this doesn't happen, then I hear complaints of boredom or getting in trouble because he was talking to this or that friend during class, which is very unlike him. He loves to learn new things and have the chance to explore all the options. He has had to learn restraint at times (he'll get himself buried in a project by biting off more than he can chew because it so fascinates him), but he more often than not needs those extra little challenges (i.e. drawing that optional picture to go along with his short story) to keep the boredom and behavior where it should be.
3. My middle child has has been in need of extra help since Kindergarten (he's in 3rd grade now), and it's very easy for him to get overwhelmed. When he's not challenged enough, he acts beyond relieved and gets just a wee bit too goofy. When he just can't seem to get it, he gets angry or avoids the subject/work completely. When it's just right for him, he struggles a little, but not so much that he gives up. What works best for him is encouraging him that he CAN do it...Just maybe not as quickly or in the same way that his brother can, and that's ok. Everyone is different and has different strengths and weaknesses (he's excellent at anything athletic which is where my oldest struggles ironically enough).
Overall, I think you have to know your kids and/or your students. Every kid gives their own signs. If they are doing something out of character for them, that's a big tip off that something isn't right. They should be engaged in what is going on, even if they don't particularly like the subject, and they should be able to do the homework/classwork without looking like they are breezing through it or about to die because it's so frustrating for them. If there's that kid that, like my oldest, everything is easy for, they'll need those extras, so a teacher should always have something available - just in case - even if it doesn't count for a grade.