I will ignore the discussion of how this tighter envelope has basically necessitated a mechanical air system and focus instead on insulation and air-sealing.
There is a lot of complexity to this topic, but in the simplest terms, the insulated envelope is trying to keep the temperature different on either side of the enclosure. If it is very hot outside, it wants to keep that out so the inside stays very cool. If it is extremely cold outside, it wants to keep that warmth in, instead of letting it escape. This thermal transfer is further complicated by the fact that warm air contains moisture vapor. We need to control moisture transmission as well, otherwise we can get water inside our walls which is detrimental.
For decades, the exterior wall has been constructed with stick/stud framing and then stuffed with insulation between the studs in the cavity. This utilized the thickness of the stud as a space to slow down that thermal transfer. But starting last year, in the State of Minnesota, the new energy code goes a step further and now requires a "Continuous Insulation" on the exterior of the cavity.
This science behind it is legit. This adds more insulation, without any gaps or "bridges" created by the framing itself. It also moves the dreaded dew point (the point where water vapor turns into liquid water) further outside the enclosure to prevent water inside the wall. But it has sent some architects scrambling for new details. In particular, regular old wood siding cannot be nailed to foam. So there needs to be additional parts added to the enclosure.
For Pure Rock Studios, we utilized a new system to combine the continuous insulation with a nailable substrate suitable for traditional siding. It is called ZIP System R Sheathing.