By saying "too much" it seems like you are passing judgement on their habit, but there is no sense of that in the Portuguese sentence which is simply a statement of fact.
[Edit: Several other sentences using "muito" are translated with "too" so I guess this is an effect you get by stressing "muito" in speech: "Eles dormiam muito" = "They slept a lot", but "Eles dormiam muito" = "They slept too much".]
So "eles dormiam muito" translates to "they used to sleep a lot" - at least when using the word bank on the task. However, how can you differentiate between "they slept a lot" and "they used to sleep a lot"? Is it - like most things in Portuguese - down to the context of the sentence?