Early in the day, Adrian Price-Whelan (Flatiron) called to discuss his latest response to referee. The referee report is (as many are) extremely constructive and valuable; the paper will be much better for every change we make in response. We discussed our philosophies about responding to referees. My approach is the following:
Every referee comment, confusion, or question is a real problem with the paper. The huge value of a referee report or submitting to a refereed journal is that you have called in a close read of your paper by a professional astronomer. That's amazingly valuable. Any place where that referee's close read led to a confusion or a comment or a question is a place where (by example!) a professional astronomer might have a comment or a question or a confusion! Even if you think the referee misunderstands, the misunderstanding is, at least at some level, because you didn't explain something well enough in the paper. So I recommend making a change in the paper text in response to every referee comment. Every comment is a real issue with the paper.