The protection for the wire is coming from two different directions:
The motor overloads will keep the current from exceeding the capacity of the #10 (or whatever). This protection is provided at the load end of the wire run.
The 40 amp breaker is there to protect against shorts in the wiring, and will protect the #10 wire just fine since any short at all will draw more than the trip point of the 40 amp breaker.
At least that is how Mike Holt explained it in the video. If you search the forum you will probably be able to find the link to the video. It was within the last month or so.
Found it:
http://forums.mikeholt.com/showthread.php?t=152085&p=1470297&highlight=#post1470297