Jonny, I am going to post some commentary from the NEC Handbook. Read it and see if it makes sense to you.
Article 310 contains conductor ampacity tables based on
conductor types, voltage rating, and conditions of use and
application. For premises electrical installations operating at
600 volts and below, the most widely used ampacity table is
Table 310.15(B)(16). Section 240.6 lists the standard ratings
of overcurrent devices. Where the ampacity of the conductor
specified in these tables does not match the rating of the
standard overcurrent device, 240.4(B) permits the use of the
next larger standard overcurrent device. All three conditions
in 240.4(B) must be met for this permission to apply. However,
if the ampacity of a conductor corresponds with a standard
rating in 240.6, the conductor is to be protected by the
standard rated device or by one with a smaller rating. For
example, in Table 310.15(B)(16), 3 AWG, 75?C copper,
Type THWN, the ampacity is listed as 100 amperes. That
conductor would have to be protected by an overcurrent protective
device rated not more than 100 amperes, unless otherwise
permitted in 240.4(E), (F), or (G).
The provisions of 240.4(B) do not modify or change the
allowable ampacity of the conductor ? they only serve to
provide a reasonable increase in the permitted overcurrent
protective device rating where the allowable ampacity and
the standard overcurrent protective device ratings do not correspond.
For circuits rated 600 volts and under, the allowable
ampacity of branch circuit, feeder, or service conductors
always has to be capable of supplying the calculated load in
accordance with the requirements of 210.19(A)(1), 215.2(A)
(1), and 230.42(A). For example, a 500-kcmil THWN copper
conductor has an allowable ampacity of 380 amperes
from Table 310.15(B)(16). This conductor can supply a load
not exceeding 380 amperes and, in accordance with
240.4(B), can be protected by a 400-ampere overcurrent
protective device.
Section 240.4(B) references 310.15; therefore all of the
provisions of that section are applicable. Section 310.15(B)
(7) permits the conductor types and sizes specified in Table
310.15(B)(7) to supply calculated loads based on the ratings
specified in that table. The service and main power feeder
loads permitted to be supplied by the conductor types and
sizes covered in Table 310.15(B)(7) exceed the conductor
ampacities for the same conductor types and sizes specified
in Table 310.15(B)(16). The overcurrent protection for these
residential supply conductors is also permitted to be based
on the increased rating allowed by this Article 310 table. Application
of 310.15(B)(7) and its table is permitted only for
single-phase, 120/240-volt, residential services and main
power feeders. The increased ratings given in Table
310.15(B)(7) are based on the significant diversity inherent
to most dwelling unit loads and the fact that only the two
ungrounded service or feeder conductors are considered to
be current carrying.
