The application is part of a branch circuit. There is a 120V branch circuit feeding several lights. There is a #12 circuit ran from a 20A circuit breaker to a junction box. From this junction box there are #16AWG spliced to run to each light bulb?
What if the entire branch circuit from the OCPD was a #16 which fed all of the lights?
A similar question with a #16 came up when purchasing an extension cord the other week. There was an extension cord rated for 20A but it was avaliable in several different sizes from #16, #14, and #12. The #12 was much more expensive than the #16. So with the cord rated at 20A, then why buy the #12 cord when the #16 is cheaper?