What makes formaldehyde 'safe' or 'dangerous'?
The toxicity of formaldehyde is dose-dependent. The famous saying "the dose makes the poison" is one of the rules of thumb about toxicology. Your body can effectively detoxify small amounts of formaldehyde in a given amount of time, however if you are exposed to concentrations that result in you ingesting/inhaling more than what your body can metabolize, then toxicity will begin to occur. 

Most consumer products with detectable levels of formaldehyde (I'm thinking of shampoos and body washes particularly) do not directly have formaldehyde added to them. As formaldehyde is a fairly reactive gas that will polymerize &amp; evaporate easily, formulation chemists will use compounds that decompose slowly to formaldehyde plus other mostly inert material. What this does is provide a constant, low level of formaldehyde present to halt microbial growth. (Formaldehyde is a wonderful disinfectant - few things if any will survive treatment with concentrated formaldehyde - and it turns out you need a LOT of formaldehyde to kill a human as compared to a microbe!)

Formaldehyde is also a natural trace compound formed in fermentation/decomposition of other organics, so it's detectable in the biosphere if you want to go looking for it - I'm sure you can find detectable amounts in fruits, wood products, even the air around a garden.