The dynamics of soft colloids in solutions is characterized by internal collective motion as well as center-of-mass diffusion. Using neutron scattering we demonstrate that the competition between the relaxation processes associated with these two degrees of freedom results in strong dependence of dynamics and structure on colloid concentration, c, even well below the overlap concentration c*. We show that concurrent with increasing inter-particle collisions, substantial structural dehydration and slowing-down of internal dynamics occur before geometrically defined colloidal overlap develops. While previous experiments have shown that the average size of soft colloids changes very little below c*, we find a marked change in both the internal structure and internal dynamics with concentration. The competition between these two relaxation processes gives rise to a new dynamically-defined dilute threshold concentration well below c*. ; Comment: 5 pages, 3 figures in the manuscript; 17 pages, 8 figures and 3 tables in the supplementary material