Like anything else relating to raising backyard chickens, there seem to be lots of different opinions about feeding eggshells back your chickens. But what everyone does agree on is that laying chickens need a lot of calcium to ensure strong eggshells. If they do not have enough calcium to create the shell, it will result in very thin-shelled eggs and calcium will start being leached from the hen's bones. You can buy commercially packaged crushed oyster shell, or you can save money by processing your eggshells to feed back to your hens.
Farmers and homesteaders have been feeding eggshells to their chickens for hundreds of years. It makes sense. Why throw out something that is a free source of such an important nutrient that your chickens need ?
Don't worry, feeding your chickens eggshell will not lead to egg eating. I have never had any eggs eaten by my girls. In fact, I think it does the opposite. By providing them as much as calcium as they need, their bodies won't crave any more and they won't be tempted to peck at the shells of the eggs they lay.
And the law of diminishing returns won't apply as long as you feed the eggshells free-choice, not mixed into their feed, so they can freely eat as much or as little as they need. I don't recommend mixing the shells into the feed anyway because if you have roosters, drakes or pullets who haven't started laying yet, they don't need the calcium and too much can actually damage pullets' kidneys later in life.
You don't need to bake or microwave the shells. Air drying is easier and works just as well. However, if you are baking already and have room in the oven, you can bake the shells until they crumble easily instead of air drying them.
One word of caution: Never feed store bought eggshells, because they can contain bacteria that your hens are not accustomed to. Only feed your hens their own shells.
Here is the simple method I use to process my eggshells:
Spread shells out to dry on a paper towel.
Once dry, store the shells on the counter in a canister or other container, crushing them a bit with your fingers to compact them, until you have a good amount collected.
When your container is full, put the shells in a plastic ziplock bag and use a rolling pin to crush the shells into pieces roughly 1/8" in size. Don't pulverize them, if the pieces are too small not enough calcium ends up being absorbed into the chickens' systems.
I leave a small bowl of eggshells in a container next to my girls' feeder and refill it as needed. They will only eat as much as they need, so don't worry about leaving the bowl out for them all the time.
I have done 'unofficial' side-by-side taste tests and find that my chickens will always eat the crushed eggshell before the oyster shell. They seem to prefer them much better.
Easy and free...doesn't get much better than that.