The gauge you need depends on amps you want to deliver over X-length. So design with the most abusive draws you can actually create on the layout or over the transformer capability (better imo). "AWG wire gauge selection charts/tools" are all over the net.
Now the transformer can't ever cook the wires, even with a nail across 3 rails AND a stuck transformer breaker(super rare). An extrnal fuse/breaker too and you're bullet proof.
(volts are nearly redundant for us "low volters"). (amps/resistance are the heat creators here)
Oversized wire is good for high power delivery and having cool wires. On rare occasions some signals/frequencies don't like oversized wire/low strand counts; but that's a bridge you likely not need to bother with.
If you use aluminium wire for power, I suggest using a heavier gauge than if copper wire (copper is king).
The jacketed wire was loosely(?) referred to as "communication wire" in my circles; unshielded, or shielded, conductive, non-conductive, etc...all liners inside)... I never ordered it myself though.
The only reason I can think of for keeping wire light is the cost of copper 🤑
