To take your navigation flight as an example, the first flight I would nurse them quite closely so they get the idea of how it should be done. Of course, if it's a good student and they get it right from the beginning I keep quiet. From ensuing flights I want to interfere less and less, keeping in mind they will soon sit here themselves without an instructor. As long as consistent with safety, let them do mistakes. But only up to the point where any more deviation just becomes time wasting. Sometime it could be a good experience to let them get lost, to know the feeling and how to regain situational awareness. Just like it could be a good idea to take them into a real cloud sometime practicing instrument flying, with a proper IFR clearance of course. It's important to de-brief them on their mistakes and how to avoid them in the future. But most students also appreciate to be allowed to make mistakes, and they always say "they learnt a lesson today".