“So, put it the other way – who would put a wind shirt over an insulation layer?”
Oh, I dunno, someone who wants to be warm and use their cheap DWR wind jacket to protect their expensive, delicate and moisture-susceptible insulation layer? :)
Let’s not be disingenuous with “wind shirt.” Our nigh industry standard, the Patagonia Houdini, is a wind jacket. In fact, the only major hiking-oriented product that I can think of whose manufacturer calls it a shirt is the Marmot DriCLime. When we over-use the word “windshirt” it’s a colloquialism, and because we’re lazy and it’s one less syllable.
And, yes, your wind jacket should be sized to fit over a thin 3-season down puffy. Even if you don’t usually wear it that way it’s still frankly not somehow ‘over-sized’ to wear without the insulation, and it’s warmer that way in case you ever need it.
That being said, I guess I see the argument about wearing it underneath during exertion in very cold conditions in which insulation wetting from perspiration might be an issue. And, yes, for when you don’t need that much warmth- like leaving a jacket partially unzipped, you are intentionally reducing thermal efficiency. That’s all rather situational, though. Like I said, I guess. The more efficient general default, though, should be using the jacket as an outer shell. After all that’s what it is.
Look at it this way:
If the wind shell is doing anything for you when you wear it under the insulation, then almost by definition that means that the wind is blowing right through the insulation and the insulation isn’t doing it’s job. I.e. the insulation has not succeeded in sequestering warm air… because the wind is managing to blow through the insulation. Logically, that’s when you would wear a windshirt with your insulation layer- on the outside– when you think the wind is impairing the function of the insulation. By wearing the wind shell underneath all you’re really doing is adding a layer of nylon as very poor additional insulation. So if you’re expecting your wind shirt worn underneath to block wind then you have already ceded that your insulation layer is pointless.
Usually, though, an insulated jacket will work ok as it’s own wind blocker and you shouldn’t even need a wind jacket. The only benefit I see to wearing a windshirt underneath the insulation in this situation is if the insulation layer lacks coverage that the wind jacket provides, such as a hood, or sleeves when your insulation is a vest (see Nick’s photo above).