As I understand it, target blood glucose levels for diabetics are based on normal blood glucose levels in healthy (non-diabetic) individuals. So presumably a healthy body has some internal mechanism for determining when and how much insulin to produce/release into the blood stream.

As far as I know, we haven't figured out what that mechanism is. But I'm not diabetic and I'm much less prone to being hypoglycemic than I once was, so my reading on the subject is fairly casual compared to when I did things like wrote a research paper on Functional Hypoglycemia in part for my own edification.