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Oversmoothing is a central challenge of building more powerful Graph Neural Networks (GNNs). While previous works have only demonstrated that oversmoothing is inevitable when the number of graph convolutions tends to infinity, in this paper, we precisely characterize the mechanism behind the phenomenon via a non-asymptotic analysis. Specifically, we distinguish between two different effects when applying graph convolutions -- an undesirable mixing effect that homogenizes node representations in different classes, and a desirable denoising effect that homogenizes node representations in the same class. By quantifying these two effects on random graphs sampled from the Contextual Stochastic Block Model (CSBM), we show that oversmoothing happens once the mixing effect starts to dominate the denoising effect, and the number of layers required for this transition is $O(\log N/\log (\log N))$ for sufficiently dense graphs with $N$ nodes. We also extend our analysis to study the effects of Personalized PageRank (PPR), or equivalently, the effects of initial residual connections on oversmoothing. Our results suggest that while PPR mitigates oversmoothing at deeper layers, PPR-based architectures still achieve their best performance at a shallow depth and are outperformed by the graph convolution approach on certain graphs. Finally, we support our theoretical results with numerical experiments, which further suggest that the oversmoothing phenomenon observed in practice can be magnified by the difficulty of optimizing deep GNN models.